Gold Investment – The Modern Market

For thousands of years, gold has been valued as a precious commodity ideal as a store of wealth for both trading and bartering. In the last few decades, however, demand for gold purchased exclusively for investment purposes has really taken off. Nowadays there are more opportunities to buy and sell gold than ever before and with the introduction of Gold ETF’s and futures contracts, there are many new and exciting ways to invest.

Gold has become much more attainable and flexible for the average consumer and there is a more diverse range of investors than at any other time in our history, which has lead to a rise in the number of gold brokers.

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Demand from the Far East

Gold has always been viewed as a great store of wealth in countries such as India and China, however other countries in the far east including Indonesia, Vietnam, Thailand, and Malaysia are now beginning to follow suit. According to the World Gold Council, demand from South-East Asia has increased by more than 250% in the last decade alone.

In China, the government actively encourages its citizens to invest in gold, which has helped fuel demand for the precious metal further. Their motives for doing this are not completely clear, however, an obvious mistrust of the US dollar could be one reason, whilst the fact that China has now become the biggest producer of gold in the world is also likely to be a factor.

Changing consumer attitudes

The nature of gold investment is changing dramatically, particularly in the west, where more investors are opting for a buy-and-hold approach, more typically seen from Asian buyers. Rather than looking to buy and sell, a large proportion of investors now view gold as a long-term investment and a potential nest egg for the future. The rise of social media has been useful in promoting gold investment, particularly through watching gold videos.

Why is this?

The most common reason why people invest in gold today is to provide a hedge against political unrest or inflation. Gold is seen as an excellent store of wealth and traditionally gold prices have always risen during times of economic crisis. A great example of this was evidenced by the dramatic rise in gold prices following the financial crash in 2009. Many financial advisers actually recommend that investors allocate a percentage of their portfolio to accommodate commodities such as gold and silver, so as to lower portfolio risk.

Checkout our recent article “is gold investment risk free” for further information on risk management techniques with gold.

Old Chinese Gold Coins

Demand for physical gold investments

Since the turn of the century demand for physical gold as an investment has risen considerably. A quick search of the internet brings up more hits on gold traders/dealers than ever before and overall demand for bars and coins rose 9 per cent year-on-year in the first quarter of 2017.

Why is this? Well, there are several reasons. One being that that gold is becoming much more readily available to the average consumer. Investors now have many options with regards to their ability to buy and sell gold. For example, the introduction of regular gold investment plans, allows investors to purchase smaller amounts of gold on a monthly basis.

That’s not all

Investors also have far more option with regards to how they can store gold. No longer having to worry about storing or insuring it themselves, they can choose to hold it in an allocated vault should they wish.

Ongoing geopolitical tensions and a general mistrust of the modern financial system are other reasons why gold has become an attractive option for many investors. Demand for physical gold was particularly strong following the result of Brexit in 2016 and with discussions still ongoing in Europe, coupled with increased tensions between the US and the rest of the world, it will be interesting to see how demand for physical gold is affected.

Demand for Gold ETF’s

Since its inception back in 2004, the market for gold ETF’s has gone from strength to strength. For many investors, gold ETF’s represent an exciting opportunity to capitalize on changes in the gold market without actually having to invest in physical gold. Demand for European-listed gold ETF’s has risen significantly in the last year and a half, following Brexit and news that the European central bank is continuing with its bond-buying policy until 2019. Experts are also predicting further growth in demand throughout 2018.

Invest through Physical Gold

Physical Gold is an experienced broker of precious metals, specialising in gold and silver investments. We sell a wide variety of popular gold products, including bullion gold coins and gold bars. Contact us on 020 7060 9992 to find out how we can help you invest.

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