Sunday, April 10, 2011

5 Good Reasons to Buy Gold

I am often asked, why should I buy gold? Why not buy stocks or shares or currency or even other commodities such as seed or pork bellies for example.

Today the US dollar is worth some 80 percent less than it did 40 years ago. This trend in the decreasing value of the dollar means that it now buys less than 5 percent of what it did some 40 years ago. Currency is not a good buy under these circumstances. Stocks and shares are subject to so many variables such as market trends, company director and management decisions and so on. Agricultural commodities are subject to unpredictable variables such as the weather for example. Few commodities have consistently managed to retain their value come what may. One of these is gold.

Unlike other commodities, gold keeps it purchasing power. Whereas each year it takes more dollars to buy the same amount of goods or services, this does not apply to gold. An ounce of gold will buy today exactly the same amount or quantity of goods or value of service as it did 40 years ago. Against a backdrop of decreasing value of currency it can be clearly seen that it is not the value of gold that changes, but the quantity of currency needed to buy that gold.

Here are five good reasons to buy gold

1. INDEPENDENCE. The security gold offers, is provided as a result of its very independence. Gold is independent of states, currencies, productivity and credit worthiness. Some economic or political influences may affect the price of gold, but not its value which remains independent of them.

2. RESERVE ASSET. Many experts advise private investors to hold between 5 and 10% of their wealth, in the long term in precious metals. Experience has shown that the regular purchase of gold and silver coins help to protect the smaller investor against price and currency fluctuations.

3. SECURITY. Gold has always been prized as precious and valuable. Over the years gold has proven itself to be one of the most reliable stores of value. It does not tarnish or deteriorate. It has no used by date and keeps in exactly the same condition as it was when first emerged from the refinery.

4. STABILITY. Despite possible price fluctuations on the open market, the value of gold has remained remarkably stable and has shown repeatedly the tendency to rise.

5. LIQUIDITY. Gold is traded around the globe 24 hours a day. With gold you possess an international currency which can always be sold around the world at any time. Currency will fluctuate in value compared to other currencies but gold remains stable in actual value regardless of the currency use to measure its worth.

Gold bars and rounds are probably the most economical and easiest way to buy gold. The larger bars one can buy the cheaper they will be due to the smaller premium per ounce one has to pay. Gold rounds are coins or coin shaped gold manufactured by private mints. They are not legal tender and the value of these is contained within the gold content. One can store small bars and rounds oneself or have them stored in a bank vault.

In today’s uncertain financial world it is good to know that there is some stability still in the offing and that it is still obtainable. It is sage advice indeed to say, buy gold.

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