Investing In Gold – The Basics

A very diversified investment portfolio has a small space for a position in gold. Some people think that investing in gold means holding gold coins, usually South African Kruger Rands, which are one troy ounce in weight. Other speculators purchase gold futures on the commodity exchange.

However, futures contracts are extremely risky because you are betting that the value of gold will rise or fall in the future. The contract itself requires a relatively small up front payment, but you will have to put up guarantees called margin to take care of daily changes in cost.

The reason investors are interested in gold at the moment is because often in the past, when the stock market is down, the gold market is up. Weakness in the dollar usually brings a rise in the price of gold too.

Another route to investing in gold is through bonds and precious metal funds, which can be bought through a stock broker. However, you will need to select your adviser very carefully, because this area of investing requires highly specialized expertise.

The following tips are meant as examples only as you will need up-to-the-minute information, if you are considering investing in stocks, shares and funds. One of the names that will come up in any search is Agnico-Eagle Mines, which trades on the NYSE and the Toronto Stock Exchange under the ticker AEM. They have 30+ year history in the production of gold and In that time, they have produced 4,000,000+ ounces of gold.

Gold has made massive profits for investors in gold since the late 1970’s. However, the secret to making profits from gold is knowledge of the various resistance points in the price and the assessment of the global market for the use of gold. It is used primarily in jewellery and electronics and some other types of manufacturing.

The biggest markets for gold jewellery is India and other Eastern countries. China’s new-found prosperity is also having an effect on the markets, although manufacturing is still of prime significance there.

You will have to have a good stockbroker or consultant, because the gold market is so complex. If you are investing in gold as a hedge against a vulnerable dollar, you are taking huge risks and you will have to to look for any strengthening in the dollar like a hawk. A fairly shrewd tactic is to set yourself reasonable goals. For instance, are you content with a 10% profit or are you going to hang out for a 25% gain?

Gold can be influenced by seasonal events. Find out when people in India get married. It is seasonal and around Christmas time. Then St. Valentine’s Day is a realistic influence too, but you or your adviser will have to examine the trends and the graphs.

You can get into gold mining stocks for fairly small money, but it is not the cost of the share certificate that is important, it is the yield on those shares. Be on your guard with small mining companies, because the expenses of exploration are ruinous. Likewise, profits on hitting a big seam would be wonderful for a small company.

Owen Jones, the writer of this article, writes on many subjects, but is currently involved with Clogau Welsh gold. If you have an interest in wedding rings too, please go to our website now at White Gold Claddagh Ring

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