With regards to purchasing gold people are often baffled. Bricks don’t create revenue, so I don’t buy bricks. I don’t buy cloth. I don’t buy commodities, and I don’t buy little gold or silver bricks either. The point is that the only thing which drives the market price of gold is demand. The only things that drive demand for gold are greed or fear.
Like gold, silver is a relatively liquid asset that can easily be sold for cash whenever you want. Of course, you may not always get to sell it for a good price and make money, but you can end your position anytime if you need to and it will retain most of its value.
Supply and demand push the price of gold as any other commodity. Supply comprises of present amounts and mine output. Once mines do not fulfill output schedules and supply dips, the price of gold jumps. Industrial need for gold brings about seasonal demand. Gold gains in value as consumers, government and private, envision weakness in the United States dollar. U.S. government debt, trade shortfalls and borrowing have a large influence upon the price of the dollar. Inflationary forces depreciate the dollar and increase the monetary value of gold. To capitalize on these jumps the worldwide gold market has formulated 2 types of contracts to keep in line and supervise supply and price, gold futures and gold options.
Ultimately, your individual circumstances will determine whether owning gold and silver is right for you. You can own the physical metals if you prefer being able to hold the assets in your hand. Alternatively, you can trade the ETFs for enhanced speed, convenience, and cost-efficiency. No matter what you decide as an investor, gold and silver are worth investigating for their lasting value and age-old allure.
Sovereign gold bonds have a tenor of eight years, with investors having the option to exit after the fifth year on interest payment dates. The redemption price will be the simple average of the closing price of gold on the previous three days. In addition, they are traded on the stock exchange with investors having the option to sell, though liquidity is low.