Gold as an investment

Image via WikipediaAmong all the prescious metal, gold is the most popular as an investment. Gold is used as an investment from years. Throughout the history of the human civilization, old has played an important role in the currency and trading activites. Gold helps you during major crisis. History is the evidence. In all the major crisis like world war, inflation period or any other economic crisis. Even when the stock exchange fails, gold helps you.

Gold helps you anytime. It can be bought and sold anytime you want. If you don’t wanna sell your gold, you can get a gold loan. The increase in th price of the gold will be more than the interest you pay.

My dad gave me some money to buy a new car when I was in the first year of the college in 2007. But I bought 20 pounds of gold instead of a car. I got a gold loan for that 20 pounds of gold and bought another 10 pounds of gold from the loan amount. Today the value of the gold I have is more than three times the amount I paid for those 30 pounds. That day the only thing I thought was that if I buy a car then I will pay three times the value of the car untill in the next 4 years on gas, service and maintainence( the four years for my graduation). 

 The price of the gold depends on some reasons like demand, central bank, industral needs, short selling, war or national emergency etc. the interest rate of the central bank and the price of the gold are interdependent. When the interest rate increases the gold price decreases and decrease in interest rate will increase the gold price.

The most traditional way of investing in gold is buying gold bars. Another way is to buy gold coins. The gold bar genrally carries lower price premium then the gold coins. But the gold bars carry risk of forgery due to their less stringent parameters for appearance. Buying jewelleries is another type of investment. It can be considered as a investment as well as a form of adorment.

For gold investors, gold certificate helps to avoid risk and cost associated with the transfer and storage of the physical bullion. Bank may issue gold certificate for allocated and unallocated gold. Unallocated gold certificates are a form of fractional reserve banking and doesnot guarantee an equal exchange for metal in the event of a run on the issuing bank’s gold issuing.

Many bank offers gold different kind of gold loan where gold can be bought and sold like a currency. People has to pay tax at some percent of their profit to the government. The percentage depends on their investment. From January 1, 2012, all the purchases that exceeds $600 per year will be required to fill IRS tax form 1099 due to section 9006 of the U.S Patient Protection and Affordable Care Act.