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In today’s world, people try to invest part of their monthly income in gold so as to have a beneficial saving for the future. One of the most attractive markets to invest in, is the gold and jewelry market. The market has provenly shown in recent years that together with the rise of inflation and the gold price, people can make remarkable benefit by investing in gold. In this article we will discuss the do’s and don’ts of investing in gold. However the main question that might engage you may be why it is frequently advised to invest in gold. In this article, we will answer this question, so please stay with us.
Is It Good to Invest in Gold?
Investing in gold has been a beneficial method of investment and gold has been normally found in archeological excavations. In an economically-oriented point of view, investing in gold is storing a precious metal that:
Can be easily changed to cash
it will never corrode or decay and home chemicals won’t hurt it.
It doesn’t come in any special quantity and one can buy as much as he/she can afford.
The material is precious even in small quantities and the price will gradually rise.
The price will grow speedily and nearly no other product’s price rises as fast.
This is a beautiful metal that can be used not only as an ornament but also as a financial asset.
Natural disasters can hurt our houses and cars but gold will not be hurt by them.
What Type of Gold Is Good for Investing?
Those who are experienced in gold and jewelry market advise investrors not to make a one-dimensional investment, because such an investment is not a correct one. With regard to the frequent market oscillations, there is always a risk of losing your whole capital.
Buying Gold helps the growth of your capital when there is a rising inflation and this type of investment has found a new form today. With regard to the development of business markets, people can choose different methods for investing in gold and jewelry market. The methods for investing in gold and jewelry market as follows:
- Investing in Second-Hand Gold
- Investing in Gold Bar
- Investigating in Gold Via Buying Gold Coins
- Investing in Gold Stock Fund
- Investing in Gold and Receiving a Certificate of Deposite
Taking a glance at these methods, you will get to know that besides buying pieces of gold and jewelry, today there are other methods of investing in gold which are far more beneficial.
Investing in Second-Hand Gold
Buying second-hand gold is one of the methods f investing in gold and many people choose it for making an investment. The risk-level of this type of investment is very high. There is always a possibility of buying fake pieces instead of genuine gold; in other words, the salesperson might sell you a fake piece of gold.
An other problem with this type of investment refers to pieces with low purity and thus low-karat. In one of our previous articles titled «Methods of Recognizing Gold Karat», it was said that pieces of gold are made on an alloy that only a portion of it is gold and there might be silver, copper and other metals in its combination. As the amount of gold decreases, gold karat will decrease as well which actually means a reduction of quality and worth.
You should also remember that if you plan to buy pieces of gold with precious gems stones, you may not consider it a short-term investment. It means that with regard to the high commission price that the customer is charged when buying a piece of fine jewelry, it will be wrong to sell it soon after making a purchase. However, after a few years and with the rise in gold price, the commission won’t look like a huge amount of money anymore.
Investing in Gold Bar
Investing in gold bar gives you a chance of buying pieces of gold that can’t be usd as ornaments but you won’t need to pay for the commission when buying it either. Gold bar has the highest purity level and is soft since it is 24 Karat gold.
Gold bar is actually the gold which has been previously melted which is why you need to pay extra attention when buying it. If the gold bar is approved by Gold and Jewelry Union, there must be a code on it which can be inquired of the union. The code indicates the purity of gold which means there are no other components in the gold bar except gold.
One of the main benefits of investing in gold through buying gold bar is that gold bars are usually vacuumed and weigh between 100 milligrams to 50 grams. This is while coins are usually sold in specific quantities of half-coin, quarter-coin and full coin.
Another advantage of this type of investment is in the karat of gold that has been used to make the gold coin. Gold coin Karat is 22 which means there is a level of impurity within it and the weight written on the package is not pure-gold weight. When buying gold, people are normally concerned about gold-coin price oscillations.
Among the prominent upsides of buying gold bars, one can mention the fact that there is no need to pay commission and you can sell it right after buying it at the same price. In contrast, the price of pieces of gold contains commission as well, and if you plan to sell them right after buying them, production commission will be deducted from the price.
Investing in Gold by Buying Gold Coin
One of the methods that has become very popular among people, is investing in gold by buying gold coins. Gold coins are sold in three different sizes, each of which has its own weight.
Bahar-Azadi Full Gold Coin : 8.133 grams
Bahar Azadi Gold Half-Coin: 4.066 grams
Bahar Azadi Gold Quarter-coin
The karat of gold used for making gold coins is 22, however, you may hear 900 karat when talking to sales people. To get a clearer idea about it, we suggest you read one of our articles titled «How to Distinguish Gold Karat»
What usually makes gold coins different from other gold ornaments is the absence of commission in gold coins. With regard to the fact that labor force has been applied to manufacture pieces of gold, we need to pay a sum of money to the salesperson and the same amount will be deducted from the final price when we plan to sell the piece.
What we should take into account is teh effect of demand and supply on gold price. In other words, as the demands increase, the supply will be reduced which results in a rise in gold coin price.
Investing in Gold Stock Fund
Many people try to invest in gold but also like to take advantage of a method which keeps their capital safe from the market oscillations and the concerns of taking care o gold.
After making a purchas, the gold coin deposit certificate will be issued and of course investing in stock funds is the best choice for these people, since stock fund is tradable.
they are appropriate for those who don’t have a large capital and yet plan to invest in gold. To invest in these funds, you don’t need to have enough money for buying a coin or a gold bar. The sum you pay totally depends on you.
This type of investment is very similar to investing at the bank, however, when investing at the bank, people worry about a decrease in the value of their money. However through such an investment you can take advantage of the profit that you will make as a result of the rise in coin price.
Another important feature, in comparison with other types of investment in gold, is gold liquidity which is the possibility of converting gold to cash as soon as possible even during the periods of stress. It means that even when we can’t easily convert gold to cash, these funds can be easily converted to cash.
Professional experts supervise these funds and incase of any oscillations on the market, there will be no threat to your capital. They spend part of your capital on buying coins and the other part on buying documents, as a result of which investing in gold won’t be one-dimensional.
Investing in Gold and Receiving Gold-Deposit Certificate
In this investment style, people will receive worthy documents in return for investing their gold coins in the stock market which will be issued according to the principles of the stock market As a result people won’t be worried about physical security issues when transporting the coins and if they plan to sell the coins, they will be tax-free.
People will need to present their requests 24 hours in advance of receiving them. They can also place a request about selling the coins and the money will be will be deposited within 24 hours.
One of the main advantages of thi investment style, is that people can use coin depositing certificate as collateral documents and recive the loan or other facilities they wish to.
Conclusion
In this article, we discussed investing in gold and said that if you plan to invest in gold,you need to be ready for market oscillations, since the global gold price is influenced by seceral factors and every economical change, leaves the first effect on gold.
Gold price is partly associated with the oil price. With regard to the fact that inorder to extract gold, there is a need for oil, oscillations in oil price will affect the gold price as well.
In order to invest in gold, you’d better make a purchase when there are not many demands so that the market will be experiencing fewer oscillations and the final price won’t be affected by them. For example, there are no wedding parties during Muharam and Safar months in Iran which means there will be fewer demands then.
Don’t forget to shop at reliable stores andask for an invoice, in which they mention the gold karat. Therefore there won’t be a risk of buying platinum instead of gold.
If you plan to invest in gold, don’t go choose pieces of gold with gem stones. It was already mentioned that buying pieces of gold and fine jewelry is not usually for investing in gold, but mainly for use. Thus, with regard to the ornamental application of these pieces, you should naturally pay a large sum of money on commission. As a result, a large sum of money will be deducted when you plan to sell that piece as commission.
You may wish to hit two birds with one stone and buy beautiful piece of gold both for use and investment. We invite you to visit EG gold and jewelry store.
