Top 5 Reasons For Buying Gold
The current economic downturn has proven the vulnerability of most investments to effects of globalized economy in a state of shock. Share stocks and bonds fail to provide investors with the safety they need and with the promised return of investment, while segments which were recently leading the development of the global economy - technology, finance and real estate - are now in stand-by, prudent at best when it comes to distributing dividends. There is however one market which managed to stay away from the mayhem wrecked by the market downfall - the gold market. Sound investor advice goes that in terms of economic recession, gold is one of the best investments one can make. Here are several reasons why.
First of all, gold is the only "pure asset" around. It does not generate costs and has an intrinsic value, as opposed to most other assets. How come? Well, for one, owning gold does not come with paying taxes, as owning other assets does - the house, the car, the bank account. Second - gold has its own value, based solely on offer and demand. Gold's intrinsic value becomes evident when compared to other assets, whose value is mostly a factor of trust, either in the ability of governments to generate economic growth in the case of state bonds, or in the ability of companies to generate profit - in the case of share stocks.
Another reason to invest in gold is based on the hedging that gold provides against inflation. Hedging is a financial term which means protection against price fluctuation. In other words, the price of real estate for instance may fluctuate based on several factors, such as proximity to various touristic objectives.
The value of gold on the other hand, varies only slightly, and is only influenced by offer and demand and market availability. Moreover, by studying the long term evolution of gold price and comparing it against inflation rates, we find out that the value of gold value has always been above inflation, thus effectively protecting investors from one of the worst effects of economic crisis - decrease of financial power of currencies.
The high liquidity of the gold market is another argument which recommends gold investments. High liquidity means there will always be buyers for the gold, no matter how difficult economic conditions get. By comparison with real estate where you have to select the right Realtor to sell the property with profit, or with the stock exchange market where the buyer interest dictates whether the moment is good for selling or buying, with gold you are always sure you have a buyer and that the price obtained is better than the price you paid. And last, but not least, gold is a rare and limited resource. As with any limited resource, the demand is always on the rise, which leads to higher prices - a situation ultimately benefiting all gold owners.
Article Source: FxTradingStock.com
About the Author
Learn from professionals how buying gold can help you in times of recession.
by: Paul James Harrison
Total views: 51
Word Count: 495
Date: Sun, 27 Jun 2010
Publish/Share this article
To use this article on your site click here to get the HTML code
Rating: Not yet rated
Login to vote
Related Articles
How to Invest in 2011 and Beyond Without a ClueWhat Is Forex Trading?
Quick Way To Trade In Shares
ATM Calendar Spreads, Are You Aware Of The Hidden Gotchas?
Emini Day Trading Requirements
The Coming Death Of The Dollar
Fantastic Fundraising Suggestions
Winning Big In The Share Market
