Gold has always been popular in troubled times. During the Peloponnesian War (around 431 BC) between the Athenians and the Spartans, the Athenians melted down the gold from the statue of Athene in the Parthenon in order to issue an emergency gold currency. It’s a fashion that has continued ever since. Recent economically choppy waters have seen record rises in gold prices. Central Banks have their own reserves of gold and although not adverse to selling it from time to time the current trend is for them to purchase, keeping the prices high and returns good for investors. However, despite its reputation as the investment of the wealthy, gold is accessible for investors of any level.
As a first time investor in gold, there are some sectors of the market to be wary of. You can speculate by investing in shares in gold mining companies. On average the World Gold Council estimates that 2500 tonnes of gold are being mined annually, much of which is destined for the jewellery trade. With such small amounts being introduced into the market each year it may seem attractive to buy shares in your very own gold mine. However, this is a high risk strategy. Mining operations can be affected by all manner of problems; from sudden unexpected nationalisation to war, famine and plague. Geology can affect expected returns and for this reason alone, investment in gold mining operations should be only undertaken by the experienced.
Also Read: Why Should I buy Gold?
Bullion, coins and jewellery
Once mined, unlike most other commodities, gold remains in circulation. Jewellery can be returned to the market, and gold bullion is held by Central Banks and investment companies. For those new to investing in gold buying bullion, gold coins or even jewellery is probably the safest way to invest. Gold has been subject to some record breaking highs recently – but there is always the danger that it can fall. Over time gold will remain a viable investment – very much like property investment and possibly less risky. By investing a section of your portfolio in gold you create a sound basis to your holdings. Gold, unlike cash, is not subject to spectacular devaluations and inflation. An ounce of gold at today’s prices (around £1000) will be worth the equivalent if not more in 20 years’ time, whereas the same amount of cash will most likely have devalued to the status of ‘pocket money’. Gold coins may hold more attraction for some investors as they have the potential for a ‘numismatic’ value in addition to the face value of the metal – this simply means that the older and rarer the coins the higher the price.
Buying gold online is relatively straightforward although a number of factors need to be considered. Gold bullion can be sent direct to you and you can arrange your own storage. There are additional insurance costs in this case – to ensure you receive the gold safely. However there are numerous gold trading sites that can arrange storage for you. If you are buying gold for the first time it’s worth considering the reputation and the guarantees offered by the site your purchasing from. National mints that supply gold bullion and coins should offer some of the best security and guarantees on the market. For the first time investor gold bullion should be the first option to consider. Gold is a reliable way to protect wealth and to establish a strong basis to a portfolio. While wars and economic troubles can see rapid rises in the price of gold, silver and other precious metals, the most common gold investment strategy is to retain ownership for several years – to protect cash wealth against devaluation and inflation. Investing in gold is one of the oldest methods of wealth protection, and offers a level of security that is available in few other investments.