Gold has fascinated human beings for thousands of years, in the sense that it never tarnishes and also has a unique color and lustre.
But as a matter of fact, gold is useless in engineering terms, except for plating electrical contacts, to ensure they never tarnish and lose their conductivity. You will find gold plated contacts on good quality hi-fi components. The metal is too soft, with too low a tensile strength to be used for much besides necklaces and rings. Gold ornaments are most popular amongst women in any part of the world.
As a form of precious investment though, gold is a different story altogether.
Gold prices fall and rise, largely according to the degree of fear that people have about the future. When war is imminent, gold prices soar, as more people buy gold.
They are several reasons for buying gold. This gold will be there regardless of what happens to the currency and because war tends to lead to high inflation, paper money becomes worth less and less. People outside the war zone buy gold because they see the price going up and they also think that it will keep going up and they will be able to sell at the top of the market and realize their profits at any time by selling it at market rate.
When economic conditions are good, inflation low and employment rate high gold prices fall. Gold prices fall because it has no intrinsic value, only the value attached to it by people’s fear. In calmer times, it is possible to invest in shares and gain from the rising share prices that usually accompany economic growth. Some mutual funds also invest in gold and it is wise to make your investment indirectly in gold through such mutual funds which may give higher returns over time.
If you want to benefit largely from gold trading go against the trend – buy gold when everyone is saying to invest in the stock market. Sell gold when things are looking grim and there are many buyers out there.
Until recently, many countries made it illegal for individuals to hold gold bars or bullion. Individuals could buy gold coins and other items however. The South African Krugerrand was minted to exploit this opportunity and to earn much needed foreign exchange for that country during the years of economic sanctions. Nowadays you can buy gold, silver and platinum coins in many denominations, including Canadian and US dollars, Indian Rupees, sterling crowns and sovereigns.