The world’s largest economy and stock market, China, have much to gain from gold investing. Although China is locked into economic growth at a very slow rate, it does have major geo-political influence and has many resources that other countries would find very valuable. For example, China’s state owned oil refineries can be a major source of supply for oil prices. Gold, unlike oil, is a precious metal that is produced in the earth.
In recent years, Chinese consumers have purchased billions of dollars of gold for safekeeping. Now, with an unstable economy, China is unlikely to be able to convince the U.S. to purchase gold as it has been doing in the past. So, gold investing is more likely to remain a safe haven for the wealthy than for the current turbulent economy in China. The same is true for other emerging economies like India, Malaysia, and Pakistan.
Gold investing has never been safer, with after-tax returns averaging close to 10% annually. And, with interest rates on fixed income investments set to rise, gold investing is even more appealing. This type of precious metals also offers very high liquidity, as well as high potential return.
Investing in gold for its overall value, or as a vehicle for portfolio diversification, makes perfect sense. However, gold investing should also include the possibility of short-term profits as well. By understanding when gold is the appropriate time to sell, investors can take advantage of the small price fluctuations to make extra money. Gold is often used as a tactic to increase profits in Forex trading, but investors can apply the same technique to other markets as well.
For example, gold coins are a popular form of investing due to their historical significance and increase in value over time. Even the price of gold coins, which are not bought and sold on the open market, have risen significantly in recent years. This type of investment is a great way for long-term investors to own physical proof of gold ownership.
One of the most common forms of investment is holding an ounce of gold bullion at any given time. An ounce of gold will always be worth more than an ounce of U.S. dollars due to the inflation of the dollar. Although, gold itself is not changed by inflation, it does lose its value due to the fact that gold is not produced by nature. The present value of gold bullion is also more than the value of gold coins because of the very nature of the item, which is always tied to the inflation of paper-based money.
For investors who understand how inflation affects the economy, this inflation is the ideal scenario for acquiring gold. Holding an ounce of gold bullion will ensure that in the event of an inflation caused by an economic disaster, you will have something tangible to hold onto. The amount of this type of investment will vary according to how much you are willing to invest. The annualized return on your investment will also differ according to whether or not you hold other types of investments such as certificates of deposit or mutual funds. The annualized return on a certificate of deposit is usually less than the one of gold, though some mutual funds will offer higher returns.
These investments are safer than other investments, especially when you do not hold other types of investments that will suffer a drastic decline in value due to inflation. Gold investing is considered one of the safest ways to accumulate tangible possessions that can be held throughout all economic cycles. If you are a person who has a lot of risk tolerance, gold bullion may not be the best option for you. However, if you are looking for an investment vehicle that offers a higher rate of return but also includes a safety feature, then investing in gold bullion may be the way to go. It should be stressed, however, that this type of investment is not appropriate for all investors due to the high level of risk associated with it.
