Buying gold bars compared to buying stocks in a mining company are light years apart and never the twain will meet. Gold and silver bullion is the end product of some serious heavy industry, unprecedented security measures and a distribution and storage network which would grace the plot of any adventure movie or novel.
Buying gold bars and other bullion products is an investment in a tangible asset and while there is a continuing demand which increases daily, the spot price of gold will continue to rise. Whereas the fortunes of a mining company and its stock market price is subject to many differing effects, poor ore quality which means reduced returns, industrial action and political restrictions in its home countrythe list goes on. Indeed even in a booming bear market which has seen the price of buying gold bars rise from a lowly 252 US dollars an ounce in 1999 to the present level of 1500 US dollars an ounce, the fortunes of a mining company can tumble overnight if production drops or fails completely, or indeed the mine starts to deplete and the stock price can tumble dramatically. Remember the stock price of a mining company reflects the efficiency and profitability of one particular company whereas the spot gold price reflects the entire supply of gold bullion coming onto the marke t and the demand upon it being made by investors around the world. It is a cumulative price and if one or more mining stocks tumble for any particular reason this may affect the overall spot price of gold on the open market and help inadvertently to push it up a couple of dollars an ounce, such is the nature of the markets. If the supply of gold falls even slightly this is reflected in the spot price, and if demand continues at the same pace or more, the price will invariably rise to accommodate it.
However, if your investment happens to be in a stock of an unfortunate mining company which experiences industrial issues of one form or another your investment could suffer. The problem with stock investments is that they are currency based and as currency devalues so the stock devalues to the same proportion, if the dollar devalues by ten percent then any stocks quoted in dollars will reflect that devaluation. The alternative of gold investment is true; when investors are buying gold bars priced in devaluing US dollars the effect is to push the price of gold up also and this has an accumulative effect on the spot gold price.
Because gold is a tangible asset, as the value of a currency falls it takes more of that currency in real terms to buy the same weight of gold thereby protecting your investment. If your investment strategy could benefit from more detailed advice, information and an honest platform for buying gold bars log on to the website of the Certified Gold Exchange, the address of their website is /how-to-buy-gold.
iAutoblog the premier autoblogger software
No comments:
Post a Comment