The Return Of Gold In The Business World
If you pride yourself with your economic background, then the name of George Soros must ring a bell. He is "The Man Who Broke the Bank of England", an American citizen born in Budapest. He managed to make his first $1 billion by betting that the pound sterling would go down during the 1992 UK currency crisis. So Soros borrowed 10 billion pounds which he later put on the market. After the pound was devalued he bought the amount back at a lower price, returned the 10 billion to their owner and made a return of 1 billion. Not bad for a single person! The transaction is called in technical terms short selling and has become famous throughout the world.
What is even less known is the fact that the UK was going through a serious currency crisis. The pound sterling was pegged to the Deutsche Mark within the European Exchange Rate Mechanism of which the UK was a member. When the peg became no longer sustainable and the Bank of England failed to act swiftly to float the currency (let its value be determined by market forces rather than artificial financial maneuvering), the pound collapsed. In short Soros made his first $1 billion during a crisis.
Hoping for a major economic downturn to occur to make you rich is not exactly the right solution. They do not come by so often, though some would like to disagree and they do not last for ever either. This is part of the reasons why business people should consider other ways of putting their money to good use. And investing in GOLD sounds and is a safe and long-term investment.
It is a stable and long-term investment. Be it jewlery, Krugerrands-gold coins from South Africa or gold bullion bars, gold has always been preferred over just putting money into a bank. Under normal economic circumstances interest rates on deposits are low as an incentive for people to go spend their money on the market. Money will only be expensive if banks need liquidity and hence start attracting capital. But again, this only happens during economic recessions as the current one.
In what gold is concerned, the good thing about this downturn was that it showed how safe of an investment the precious metal can be. In fact buying gold has increased during the past years. According to World Gold Council data, the retail demand for bullion in the 4th quarter of 2008 was around 5 times higher than during the same period in 2007. Let down by insignificant deposit rates and wobbly stock-markets, business people throughout the world decided to return to the oldest investment in the book: GOLD.
Article Source: FxTradingStock.com
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Learn from professionals how to buy gold bullion bars in times of recession.
by: Jack Wogan
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Word Count: 446
Date: Sun, 27 Jun 2010
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