Gold: 3 Essential Facts For Your Future

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Best selling financial journalist provides three essential facts about gold.

When any market crashes, it’s a shock. For a real nose dive it normally takes something unexpected and dramatic to kick it off. If people had any idea of the reason or that it was coming then the fall would start early and be more shallow.

1. Gold is a commodity

Gold is misunderstood and it is viewed as “the mad metal”, so here are three things to remember whether you love or hate gold.

To many people gold is something special. It’s more than just another metal that comes out of the ground. This may well be because since the dawn of time gold has been a status symbol and status is what breeds success or simply just breeds.

Whatever you feel about gold, it is just a metal. That isn’t necessarily a bad thing and it doesn’t mean it needs to be cheaper.

Gold supply has not kept up with demand so its price should rise. Where once gold was used on things that could be easily recycled. Now gold is used in things that don’t get recycled in a way that the gold is being recovered. So gold is being lost.

2. Gold is volatile

Gold used to be worth a lot less than it is today. As we have seen recently at ADVFN, you don’t have to look hard to see gold is as vulnerable to swings in values as any other commodity.

The key to investing in gold is being able to watch the gold price live. A free ADVFN account will allow you to follow it live and direct at home or on your tablet or smartphone via our free app.

3. Gold is not a stable store of value

It is a myth to believe gold is a constant store of value. Like anything else the price of gold is created by supply and demand. When the Spanish pillaged South America and brought the gold and silver back to Europe, there was rampant inflation. More gold meant gold money was worth less and the price of things in gold went up.

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Comments

  1. Bill Murphy says:

    Here are a couple of points that may need to be cleared up regarding your 3 Myths of Gold
    1. Gold is a commodity

    I think you may have confused this statement with Silver. To my knowledge gold is not used as an industrial (mass production) metal, the best electrical and thermal conductor is silver and is currently about 1 fiftieth the price of gold. I could be wrong, but I just can’t see any industry paying substantially higher prices for lower performance.

    2. Gold is not a stable store of value

    As you point out, when there is an influx of any commodity (even currency), then the intrinsic value diminishes. For instance when the US was on the gold standard up until the early thirties, there was next to no inflation. When the US decided to revalue its dollar from $20.35 / oz to $42 it caused a spike in inflation (prices rising in dollar terms – not gold terms)and then settled higher and was stable up until the US went on the Gold Exchange standard. This meant that the US dollar was no longer linked to anything tangible (gold) and a quick Google search will show you that since the early 1970 there has been no time where inflation (devaluation of the dollars purchasing power) occurred. I would suggest this is the reason that people are tuning to gold, because as you pointed out when Spain introduced more gold into their monetary system, it caused a devaluation of gold, the same can be said for the “money printing” of currencies around the world. And as we can see from the rise in gold’s price since the 1970s because of the continuation of the expansion of the monitory base, if we apply the same logic, the price of gold will be going higher (as will the price of everything else).

    3. Gold is volatile

    There is a difference between “worth” and “price” more people used to own gold 100 years ago, than they do now. People 100 years ago placed a higher “worth” on gold, the price of gold higher now, but to the average person today, it is not worth as much as it was to their Great Grandparents.
    Regarding volatility, people often equate a commodity or commodities as being volatile. I find this funny, because this infers that there is a demand issues. No one ever questions if it is the US dollar which is the volatile one moving against everything else. Lets face it, how often have you seen all comedies fall relative to the US Dollar.
    If you think about it, is it far more logical for a large number of items to move simultaneously or for a single item to move?
    — If a ship sinks, it is not the ocean rising, but the ship falling.–

  2. peter marton says:

    Gold is only worth what some other fool with too much momney is willing to pay to own something he has no use for.

  3. Tony Emphis says:

    Gold is money that has held value for 6,000 years

  4. Garetz says:

    This article is very misleading.

    The reason gold has value as it is seen as a status symbol.
    You cannot eat gold, you cant house yourself with gold, nor can you readily use it (maybe as a door stop).

    So it stands to reason that it isnt really worth anything to the individual except as an investment, however its worth infinitely more than paper fiat money is. Demand vs Supply will always determine its true worth. As fiat money has infinite supply ( as the reserve bank is printing so much to devalue their usd) There is a finite amount of gold in the world, once all the reserves are dug up, there will be no more left to sell from the earth. The cost benefit of digging even deeper to find gold will become prohibitive, when this happens gold prices will skyrocket.

    Gold is worth much more to governments than the individual, unless you are a billionaire. As it strengthens their own currency. An individual cannot print their own currency unless you are a king, so gold has no real value except against fiat currency you hold yourself.

  5. bob says:

    Another SHILL article attempting to push the price of gold up before another dump…..

  6. Michael says:

    It is obvious that we are living in very worrying and daangerous financial times. People will turn to commodities as these represent a real store of value.

    The large banks will do anything they can to stop the gold price from rising – this includes the US Federal Reserve Bank. I first realised this after the 1987 crash when the US Federal Reserve started to sell gold after it breached the US$ 500/oz level.

    There is a lot more to come and I am sure that the ordinary person is kept in the dark

  7. Luwang says:

    Gold is I guess spiritually link also. The color of the light you see when you start communicating with spirit (ie if you believe there are spirits) is golden.

    Maybe that could be the reason in many cultures since time immemorial from around the world why gold has been the most valuable commodity instead of lets say silver or copper!

  8. banjo says:

    Gold is more valuable than paper. Gold is valued because it is the most concentrated form of wealth storage that holds all the properties of currency plus the attribute of money called “store of value”.

    The reason it is a store of value is that governments can’t conjure it into existence unlike trillions of dollars called TARP, TALF, Maiden Lane, LTRO, QE blah blah. Theft is the easiest way to describe those programs.

    Lets be wildly optimistic and say central banks around the world have
    60 tonnes of gold.

    That’s 8.57grams per person alive. If you wanted a kilo from the central bank stack only 60 million out of 7 billion could snag that. or 0.009% of the population. Oh wait I’ll line up for that valuable paper that you just print up by the trillions. Hahahah what a joke.

    To all the people that don’t like gold just dump it and buy all those wonderful paper promises called “EQUITIES”, “BONDS” and “SECURITIES” they should call those instruments “Go nothing”, “Fingers Crossed” or “Wish and a Prayer”

    Good luck!

  9. Henry Hedley says:

    Get this bloody thing off my computor.

  10. Bud says:

    Central banks own gold as a monetary asset, not as a “commodity”. On balance, they are now accumulating more. This is a complete reversal of their previously long-standing trend to systematically divest gold.

    While gold is not a constant store of value, it has beem constantly a store of value since history began, and as paper money never has been.

    Neither of these facts requires expert “analysis”. Only observation.

  11. Seanoamericano says:

    Buy real physical gold not some garbage piece of paper they say is backed in gold. Think federal reserve note. Fiat paper not woth the ink its printed with. Anybody selling this is a conma. Its your money but why waste it on promises. I got a Ferrari and in return for you cash I will send you a piece of paper that says you own it. I will keep it for safe keeping for you in a safe place trust me.

  12. greg p says:

    The reason we are so confused about this issue (gold, money, etc.), is because we literally have no use for it.

  13. ZZbar says:

    I rather spend my money on a bottle of Ripple (16 oz) then (16 oz) of gold.

  14. nofool says:

    ZZbar is probably a homeless wino, what an idiot!!

  15. Anjaan says:

    Gold is perhaps the only investment which requires the least understanding of the economics of investing. Perhaps that is the reason why people have invested in Gold from time immemorial ……… someone here has commented that Gold has no utility and only the idiots invest in gold ….. !! …. what a level of intelligence …. !!

  16. Joseph says:

    It’s sad that most of you are wrong. Gold is a CURRENCY. Imagine there are no pennies, nickels or dimes or dollars; or they all become worthless (think Zimbabwe), then what do you do? You have to buy or sell, or barter. If not bartering or trading food, etc., you will need something of VALUE. Gold has value and has had value since the beginning of mankind. It always will. Yes, it goes up and down but if you have a $160 in cash TODAY and 1/10 oz. of gold TODAY, what do you think will be worth more 100 years from now, your $160 in cash or your 1/10 oz. of gold? I knew you’d answer that correctly! GOLD!

  17. dassa0069 says:

    GOLD IS MONEY YOU CAN TRUST; AT LEAST FOR THE PAST 7,000 YEARS.

  18. De Fizi Baraka says:

    Let us not dream about Gold. It is all about mysticism and the possessed rich people who want to get the Gold power spirit. Rich people get conned everyday on Gold but they never stopped, what a spiritual possession Gold has dragged them in! It is a shame and pity. There is nothing value about Gold except the madness paranoia of riches and the nature force of mother land. It is an unstoppable crazy world of materialism, honor, respect and evil possession.

  19. Bryce says:

    If you have Gold, I would hold on to that for 10 or so years. We are at the dawn of a new age… waiting to spike any moment. Gold will be rare soon.

  20. Nadir says:

    i belive that gold was once so cheap in value that it was traded for salt in countries like Mali

  21. adil says:

    hi..aim beginner of marketing can you help want can do thanks…….

  22. goldisgood says:

    Actually you can eat gold, it is crazy good for you. Also it can be used to fixed the hole in Earths ozone layer. Also it is a much better conductor of electricity than silver you retard. In fact gold has more uses than any other metal .

  23. Bipin Raj says:

    Gold has value in any country. But currency may be just a piece of paper.

  24. WINSTON JOSHUA TAR says:

    The doctrines of gold is the evaluation, combination and evaporation of natural living things which was made by God. In fact, it’s already written in the book of nature that gold is purify and valuable all time and in human life exist. (Nature + Gold + Asset = $$$$)

  25. Ian says:

    If you are going to buy gold, then buy gold – not a piece of paper telling you you own some gold. Otherwise it is a scam.

  26. ko says:

    stopped discussion about Gold value or not . Gold is a metal , money is paper . if people use all are value . thank you

  27. peterspc says:

    when inflation starts to rise as predicted early next year gold will also rise in value so now is the time to buy gold .

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