Investing in gold is a great way to make sure that your portfolio stays stabilized even in the most torrential of markets. While the entire world has been an economic recession as a result of overvalued homes in the US, those who have chosen to maintain a consistent amount of gold in their investment portfolio had been virtually unhampered by the effects of the recession.
It is important to remember that hundreds of years ago, all nations’ money was based on the gold, which the country had in its reserves. Then just over a century ago, a major change occurred which resulted in national currencies being based on a debt system rather than the gold system that had stood the test of time for millennia.
As a result, his debt based system allows a nation to freely print as much money as they need to pay all of their bills. However, when they print too much it inflates the value of their currency and has it on their economic prosperity. And although this is seen as a means of checks and balance, it is far from that.
Gold in itself is an investment. There is never to be any more gold found in the earth. We already know exactly how much gold is left in the earth and as such its value is based on the realization that there is limited quantities of the precious metals, their value is therefore increased. As the demand for these precious metals increases so too does its value.
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Paper money on the other hand works in a very different manner. There is no limit to the amount that can be printed by a government. There is an infinite amount that could be printed over a given period of time. Further, as the demand for money increases its value becomes inflated and therefore decreases.
This basic concept implies that when the British government begins to print more money, it is time to buy gold in the UK. The truth is, that the more money which is printed, the more that its value is inflated and therefore the more that the value of gold is increased.
Although this may seem a bit complicated, in all simplicity as the value of money goes down the value of gold goes up equally. As money becomes inflated and worth less, more and more people turn to precious metals as a safe investment and therefore drives the value of gold up higher.
When it comes to buying gold in the UK, there are a number of options available to you. The simplest way to invest in gold is to go down to your local pawn shop and purchase it at a low market rates. Of course then again you have to recycle this in order to get any kind of return on your investment. The best return comes after you refined the gold itself and then recycled it.
Then of course you have the gold bullion which comes in bars and coins. These can be bought from bullion shops as well as from coin collection shops around the country. The downfall is that they are often sold at values higher than that of the going market rates. Furthermore, when you go to sell these forms of gold, you will never get the going market rate and therefore you must wait until a higher margin is reached before you can sell for profit.
However, more and more people are choosing to invest in the stock market. There are multiple options that are available today including purchasing certificates as well as buying Exchange Traded Funds. When it comes to certificates, you own a piece of paper which represents physical gold that is sitting in a ball somewhere within the country. However, you do not physically own metal. With ETF’s on the other hand, your money is being pooled with other investors to buy into companies that mine, refine and manufacture gold products. In the short term, ETF’s can be a very profitable option.
In terms of a return on your investment, generally speaking when you invest in the gold bullion coins and bars, your rate of return will be right around two percent per annum. With ETF on the other hand, your rate of return can be anywhere between four and five percent per annum. However, when dealing with scrap gold such as that purchased at pawn shops and at local yard sales, your rate of return can be as much as 20 percent per trade.
Just always remember that when you choose to invest in gold in the UK or anywhere in the world, there are inherent risks that you must be willing to take. It is possible for you to lose some if not all of your investment. So be careful when looking to buy gold UK, make sure the company or broker you are using is 100% legit and start with a very low test investment. Then once you know they are a bonafide company or dealer etc, then go for larger investments.Dan Craig