Why Do Gold Prices Rise?
Once currency, gold is nowadays a commodity regarded as one of the most reliable forms of investment.
Nevertheless, as with all commodities, the value of gold is directly influenced by a number of factors that contribute to the temporary rise, or lowering, of its price and its repositioning in the global economic equation.
Obvious factors that can cause a sudden change in the price of gold are natural or historical disasters: world wars, global-scale economical crises, fall of the real estate market, bank failures, famine, pandemics or other worst-case scenarios alike.
During such periods, due to the devaluation of paper currency, people feel comfortable investing in assets that are very unlikely to lose their value, and gold most definitely is one of these assets.
Consequently, the price of gold rises considerably during such ill-fated periods.
Of course, like most commodities, the price of gold is directly influenced by supply and demand.
Nevertheless, given the fact that gold is a limited natural resource and most of the gold that was ever mined is kept, stored or traded on the market, the price of gold is less influenced by annual production and more by the circumstantial inner workings of economic trends.
Ever since 1919, the price of gold has been set by the London Gold Fixing, a procedure through which representatives from five bullion-trading firms of the London bullion market conduct a teleconference twice a day, at 10:30 a.
m.
and again at 15:00 p.
m.
and settle on the price of gold.
This is generally recognized to be the benchmark for the day-to-day specific value of gold or gold-related products, so if you're interested in investing in gold, be sure to tune in twice a day to London Gold Fixing.
There are direct and indirect forms in which one could invest in gold.
Certificates, accounts, derivatives, or shares are indirect forms of investment.
These allow gold investors to avoid the risks and costs associated with the transfer and storage of physical gold.
Nevertheless, the most secure and reliable form of investment is the acquisition of actual gold bullion, sold in the form of bars or coins.
Of these two, gold bars generally carry lower price value than gold bullion coins, due to the fact that coins have a higher purity and are priced according to their fine weight.
The level of purity in bullion coins varies from issue to issue, but 99.
9% purity is the most commonly found, a good enough reason for you to choose them when deciding to invest in gold.
Nevertheless, as with all commodities, the value of gold is directly influenced by a number of factors that contribute to the temporary rise, or lowering, of its price and its repositioning in the global economic equation.
Obvious factors that can cause a sudden change in the price of gold are natural or historical disasters: world wars, global-scale economical crises, fall of the real estate market, bank failures, famine, pandemics or other worst-case scenarios alike.
During such periods, due to the devaluation of paper currency, people feel comfortable investing in assets that are very unlikely to lose their value, and gold most definitely is one of these assets.
Consequently, the price of gold rises considerably during such ill-fated periods.
Of course, like most commodities, the price of gold is directly influenced by supply and demand.
Nevertheless, given the fact that gold is a limited natural resource and most of the gold that was ever mined is kept, stored or traded on the market, the price of gold is less influenced by annual production and more by the circumstantial inner workings of economic trends.
Ever since 1919, the price of gold has been set by the London Gold Fixing, a procedure through which representatives from five bullion-trading firms of the London bullion market conduct a teleconference twice a day, at 10:30 a.
m.
and again at 15:00 p.
m.
and settle on the price of gold.
This is generally recognized to be the benchmark for the day-to-day specific value of gold or gold-related products, so if you're interested in investing in gold, be sure to tune in twice a day to London Gold Fixing.
There are direct and indirect forms in which one could invest in gold.
Certificates, accounts, derivatives, or shares are indirect forms of investment.
These allow gold investors to avoid the risks and costs associated with the transfer and storage of physical gold.
Nevertheless, the most secure and reliable form of investment is the acquisition of actual gold bullion, sold in the form of bars or coins.
Of these two, gold bars generally carry lower price value than gold bullion coins, due to the fact that coins have a higher purity and are priced according to their fine weight.
The level of purity in bullion coins varies from issue to issue, but 99.
9% purity is the most commonly found, a good enough reason for you to choose them when deciding to invest in gold.
Source...