An overview of the gold market

Of all the precious metals including copper, platinum, and silver, investing in gold and the gold market has been the most popular as the metal has been utilized as a hedge against economic downturns and inflation. Investors view gold as a safe haven for protecting their financial portfolios.

Gold also helps to hedge against other crises such as those that are currency-based, political, and social in nature. These different crises like our ballooning national debt, potential currency failures, declines in investment markets, inflationary trends, social unrest, and the potential for wars and other conflicts.

Factors that impact the value of gold

Like all commodities and other investments, supply and demand is the most common factor that impacts what the price of gold does. However, unlike those commodities and other investments, the disposal and hoarding of gold play a huge role in how the price of the metal is affected. What most individuals fail to realize is that most of all the gold that has ever been mined is still in existence and is potentially capable of hitting the market at the right price to create a buying frenzy.

The following is a list of three key factors that impacts the price of gold:

• bank failures
• real interest rates that are extremely low or even negative
• crisis, invasions, looting, and wars

Vehicles for investing in gold

There are 7 different investment vehicles available for buying gold that we have listed below. Although there may be others, the following ones are the most common:

Gold bars – the most traditional way of investing in gold is through the purchase of gold bullion, or more commonly “bars.” Major banks in several countries, such as Switzerland, Liechtenstein, Austria, and Argentina actually sell gold bars in over-the-counter fashion.

Gold ETF’s – also called gold exchange-traded funds or GETF’s, are traded similar to the way in which stock shares are traded on the major stock exchanges of the world such as London, New York, and Sydney.

Certificates – gold investors can hold certificates of ownership instead of actually storing the bars themselves. In this manner, investors can purchase and sell gold without the physical transference of the product having to take place.

Derivatives – futures, gold “forwards”, and options are known as derivatives and are currently traded on the various global exchanges or in the private market in OTC fashion.

Mining companies – although these do not represent the actual gold itself, you are still purchasing stock shares in companies that mine it.

Numismatics (coins) – coin collecting has been around for decades and many investors have amassed quite a collection of gold coins over the years. Additionally, gold coins are available over the counter at banks in Liechtenstein and Switzerland.

Swiss bank accounts – you can purchase or sell gold accounts in numerous Swiss banks as you would on the currency exchange market. These accounts are typically backed by either allocated or unallocated gold storage. Additionally, the purchase or sale of these accounts occurs instantaneously.