Beginners Guide to Gold Investing

Many beginners first question when they want to start investing in gold is, “When is the best time to buy gold?”

There is no one definitive answer to when the best time to buy gold is because the price of gold can be influenced by various factors, including economic and political conditions, supply and demand dynamics, inflation rates, and global events.

However, one strategy that some investors use is to dollar-cost average into their gold purchases, which involves buying a fixed dollar amount of gold at regular intervals over some time, regardless of the current market price. This can help to mitigate the impact of short-term fluctuations in the gold price and potentially provide a more stable investment over the long term.

Ultimately, the decision of when to buy gold should be based on an individual’s investment goals, risk tolerance, and financial circumstances. It is recommended to consult with a financial advisor or do thorough research before making any investment decisions.

The easiest way to acquire gold is with dollar cost averaging.

Dollar-cost averaging is an investment strategy that involves buying a fixed dollar amount of an asset, such as stocks, bonds, or gold, at regular intervals over a while. This approach allows investors to spread out their purchases and potentially reduce the impact of short-term market fluctuations on their investment returns. By investing a fixed amount regularly, investors buy more shares when prices are low and fewer shares when prices are high. Over time, this can result in a lower average cost per share and potentially provide a more stable investment over the long term.

Gold has a place in a balanced investment portfolio.

Gold has been a popular investment choice for centuries, and its value has been recognized by investors around the world. It is often considered a safe-haven asset that can provide a hedge against inflation, economic uncertainty, and geopolitical risks. As such, many investors consider including gold in their investment portfolios to diversify their holdings and balance their risks.

One of the key benefits of including gold in an investment portfolio is that it can provide a hedge against inflation. Unlike paper currency, which can be printed in unlimited quantities, gold is a finite resource that cannot be easily replicated. As such, its value is relatively stable over the long term and can provide a store of value that can protect against the erosion of purchasing power caused by inflation.

Gold can also provide a hedge against economic uncertainty and geopolitical risks. In times of financial turbulence or geopolitical instability, investors may flock to gold as a safe-haven asset, driving up its price and providing a hedge against potential losses in other parts of the portfolio. This can help to balance the risks of an investment portfolio and provide a buffer against volatility.

In addition to these benefits, gold can also help to diversify an investment portfolio and reduce its overall risk. By including gold in a portfolio that also includes stocks, bonds, and other assets, investors can spread out their risks and potentially reduce the impact of short-term market fluctuations on their investment returns.

Of course, it is important to remember that gold is not a magic bullet, and it should be considered as part of a broader investment strategy. Like any asset, gold comes with its risks and potential drawbacks, and investors should carefully consider their investment goals, risk tolerance, and financial circumstances before making any investment decisions.

This is why it is important to work with a reputable gold dealer when it is time to invest your hard-earned savings in the yellow metal. You need to investigate many gold dealers to see which is the best.

It is a good idea to read online reviews to see what other people are saying. You can start your investigation by reading reviews like this American Hartford Gold review.

Gold can play a valuable role in a balanced investment portfolio as a diversifying asset that can provide a hedge against inflation, economic uncertainty, and geopolitical risks. While it is not a panacea, it can help to balance the risks and rewards of an investment portfolio and potentially provide a stable store of value over the long term.

Why Aristotle viewed gold as money.

Aristotle’s criteria for something to be considered money were that it should be durable, divisible, consistent, convenient, and have intrinsic value.

Durable means that the material should be able to withstand wear and tear and maintain its value over time.

Divisible means that it should be possible to divide the material into smaller units of value that can be used for transactions of varying sizes.

Consistent means that the value of the material should be uniform, with no significant variations between different units of the same denomination.

Convenient means that the material should be easy to transport, store, and use in transactions.

Intrinsic value means that the material should have value in and of itself, rather than being a representation of value that depends on the trust in a particular institution or government.

Overall, Aristotle’s criteria reflect the idea that money should be a reliable, stable, and universally accepted medium of exchange that can facilitate trade and commerce.

How a Gold-Backed currency works.

A gold-backed currency is a monetary system in which the currency is tied to the value of gold. This means that each unit of currency is convertible into a fixed amount of gold, typically at a government-established exchange rate.

In a gold-backed currency system, the government or central bank holds a certain amount of gold reserves to back up the value of the currency. The value of the currency is therefore determined by the number of gold reserves held by the government or central bank.

A gold-backed currency system can provide stability to the monetary system and prevent excessive inflation, as the supply of money is directly tied to the availability of gold reserves. However, it can also limit the flexibility of monetary policy, as the supply of money is constrained by the availability of gold reserves.

Gold-backed currencies were commonly used in the past, but have largely been replaced by fiat currencies that are not tied to the value of any particular commodity.

Why Gold has endured throughout history.

Every culture on earth has valued gold.

Gold has been valued by every culture on earth for various reasons, including its rarity, durability, malleability, and beauty.

Gold is a relatively scarce resource that is difficult to extract from the earth, which makes it a symbol of wealth and power. It has been used as a form of currency, a medium of exchange, and a store of value throughout history, and it has played a central role in the development of many civilizations.

Gold is also highly durable and resistant to corrosion, which makes it an ideal material for jewelry and decorative objects that can last for centuries or even millennia. Its malleability and ductility also make it easy to work with and shape into intricate designs, further enhancing its aesthetic appeal.

Additionally, gold has been associated with spirituality and the divine in many cultures, and it has been used in religious ceremonies and rituals as a symbol of purity and enlightenment.

Overall, the various properties of gold have made it a highly prized and sought-after commodity throughout history, and its cultural and symbolic significance has further enhanced its value and appeal.


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How to Trade Precious Metals Futures Contracts

It can be very surprising that something that is dug up from the ground can be worth anything in the modern age and economy. However, precious metals have just as much relevancy today as they did in the past. Precious metals of all kinds have maintained their value over time and they continue to be sought-after assets for investors and to facilitate global trade.

You can find artifacts discovered as far back as 4,000 B.C. that showcase just how long precious metals like gold have been seen as a valued resource. There’s evidence a thousand years later that gold mines were found in ancient Egypt which likely began the same effort that exists today to both produce and store wealth.

One of the more important milestones in precious metals becoming viable as a trade commodity can be dated back to 560 B.C. when coins were initially formed. It was in the Greek state known as Lydia where it started. The Roman legion was paid monthly salaries in coins forged out of precious metals. A single coin’s value was around the same as 200 pounds of flour and 30 gallons of cheaper wine.

What’s even more amazing is that the value hasn’t disappointed. A modern worker would likely be just as satisfied with receiving payment in gold. This only goes to show how much staying power precious metals have had throughout the years and it shows the strength of precious metals going into the future. In an economy of such uncertainty, precious metals provide that level of certainty a lot of investors seek.

It shouldn’t be any surprise that precious metals continue to be sought-after and that they play such a pivotal role in the modern economy. After all, there are derivatives traded on exchanges including futures that feature a very liquid precious metals market.

In this article, we will be going over more information about this futures market and why you should care.

Some Background

To gain a better grasp of the futures market for precious metals, you’ll want to have a firm understanding of the background.

In the past, gold coins were traditionally minted with a single weight of one ounce. This is likely the main reason why the value of gold continues to be quoted today on a per-ounce basis. A single gold bar typically weighs 100 ounces. This is also the total amount covered by a single gold futures contract.

Thus, with gold at this moment trading at approximately $1,320 per ounce, it means that the notional value of a single bar of gold and a standard futures contract equally sit at $132,000.

Silver is a precious metal that doesn’t have a market value near gold. It’s significantly lower. However, like gold, it’s quoted by the ounce. Right now, the market price of silver sits at $17 per ounce.

Silver is less valuable than gold. Because of this, the majority of silver futures contracts will be denominated in much larger quantities. For instance, the larger silver futures contract can cover 5,000 ounces. Whereas the smaller contract would only cover 1,000 of them.

This ends up translating to a notional value of $85,000 for a large contract of silver and $17,000 for a small contract of silver assuming it’s sitting at $17 per ounce.

There are plenty of other precious metals including palladium, platinum, and more. However, in this scenario, we are only focusing on the two most actively traded in the market.

Precious Metals Futures Contracts

If you want a more in-depth explanation of futures contracts, we recommend you visit USA futures to learn all the intricate details.

A contract in the precious metals market is a legally binding agreement to take physical delivery of a pre-determined precious metal at a future date for a set price. The overall details of the contract including the quantity, time, quality, and delivery location are standardized by the actual exchanges. Thus, you end up having price as the only variable component of the contract.

A precious metals future contract requires you to take physical delivery of the precious metals you are bidding on after the expiration date. With that being said, a lot of the futures positions taken are fully closed before this date. This eliminates needing to take delivery of the physical metals.

Much like other future products in the marketplace, there are two distinct positions you can take. You can either go long by buying the contract or you can go short by selling the contract. When you buy the contract, you are operating under the obligation that you will have to accept delivery of the physical metal. Whereas, when you go short, you will be obligated to deliver the metals to the respective buyer.

As mentioned previously, the overall specifications of the futures will vary from contract to contract. This is particularly true when you are talking about quantity. You will find that the 100-troy-ounce is typically the most common contract, there are also others including mini contracts that only cover 33.2-troy-ounces.

The most common quantities of silver futures contracts include 5,000 and 1,000 ounces. You’ll want to understand the total quantity involved and the total amount of capital you will need. You also need to ensure you understand the specifics of the contract before establishing any kind of position.

The Different Trading Strategies

As with other futures products, you have different trading strategies you can utilize. Trading precious metals futures can offer the flexibility and diversity that you might want for your portfolio.

A future contract is usually considered an ideal investment vehicle for a lot of investors because they are traded on highly liquid centralized exchanges. This means that you can not only gain additional leverage easily, but you can also benefit from increased liquidity compared to having physical goods. Financial leverage is the ability to effectively trade and manage a higher market value asset and product without having the total capital normally required.

When it comes to the gold futures market, a trader would have the chance to leverage $1 to control as much as $15. However, you need to know both sides of the coin. It also means that you take on much more risk when you take on leverage. Thus, you have higher potential returns, but it comes with higher risk.

From a strategy standpoint, the main use of a precious metals future contract comes down to speculation, hedging, and trading a spread. This is the same as most future trading principles.

When it comes to speculation, it refers to the expression of a directional bias. Meaning, you think it’s going to increase or decrease in value.

When it comes to hedging, you can use futures to lock in the current price for the future.

One of the main things that make precious metals futures so unique is that you can use precious metals to hedge for inflation. A lot of investors have worries that holding fiat currency can expose them to more inflation risk. Whereas, if you invest in precious metals and tangible/finite resources, you can mitigate some of the risks.

By diversifying your holdings in physical goods or futures contracts based on physical assets, you can offset some of the risk associated with inflation.

Thus, it adds another dimension for market participants. This dimension includes having those that are hedging against inflation and those that are hedging against future discoveries or even other holdings.

This is one of the primary reasons why the overall value of precious metals can increase during global economic instability. A lot of investors will be exiting their growth and riskier assets to try to seek safe-haven assets that are much less subjected to price depreciation and inflation.

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How to Earn Money From Precious Metals

In our turbulent financial world, investing properly to earn money in such a volatile arena of stock market fluctuations and the value of the dollar dropping all the time. Even such things as real estate are no longer automatic money-making investments, so the knowledge and a realistic approach to the uncertainty is a key element to navigating the sea of finance. Be sure you do your homework, talk with as many professionals as you can to get an informed opinion on the matter, and don’t get sucked into get rich quick schemes or other “too good to be true” sounding investment plans.

Some people will tell you that the right investments are in commodities, while others give you the perfect stock tips, according to their broker, and others will explain to you how to leverage bonds or precious metals against inflation. While all of these people mean well and may have used their own advice to earn money for themselves, you should think twice about every bit of information thrown at you from family, friends, and average people on the street. Talking with industry professionals and financial consultants will give you a better handle on your investment potential. You still may want to dabble in purchasing hogs or gold coins, but as part of a comprehensive investment portfolio, not just on a whim.

The biggest key to investment success and the way to earn money as you choose to put faith in a company, a specific item, and its future global demands, or even a currency of a specific nation, knowledge and investing in moderation would be the wise decision. Unless you have risk capital, or in plain terms money you can afford to lose, and want to take a big risk on speculating the short-term increase in a particular commodity or want to take a risk on a start up company’s stock, you should always invest in moderation.

Overall, investing is basically gambling, and it is merely the ability to earn money by hedging your bets to balance your odds and win more than you lose over the long haul. If you want the big kill, put more money in higher risk stuff while still maintaining some conservative investments so you don’t end up broke in the end.

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People Prefer To Invest In Gold

Lately, there is another trend in the savings products market – investment in gold. Despite the crisis, the value of gold has increased in the last period and the tendency continues. Investments in gold bullion bars seem to be the most recommended ones in difficult economical periods.

Nowadays is risky to invest, you need to consider when you make big investments that the political and economical situation can affect the value of your goods. Financial analysts conclude that in a crisis the best way to protect your money is by buying gold bullion bars. Their value is increasing year after year, so you will have benefits. Specialized companies are offering for selling sovereign gold coins, pooled gold bullion bars, and classic gold bullion bars, products suitable for all clients and all pockets.

Gold is the best protection against economical recession and inflation, according to finance experts, by investing in gold you are reducing your losses and obtaining profit when everybody is losing due to difficult economical situations, present all over the world. Investing in currencies is like gambling, today you can win the Jackpot, but tomorrow you can lose everything.

On the market you will find a variety of gold savings products, starting with gold coins and ending with gold bullion bars. Their purity is 24 ct and fineness is 999.9, having different weights and presentations. Some of these products are affordable for all clients and some are for those with good financial means. Be careful when you are buying gold from where you are buying and from whom. Appeal to a specialist for avoiding unpleasant situations. Consider some aspects when you decide to buy gold: the reputation of the supplier, the weight, purity, and fineness. Some companies are offering extra services for their clients, such as buyback services, free storage, insurance, and delivery in the safest conditions. Some gold products are cheaper some are more expensive, but all have exceptional quality.

For those with financial potency, the best option is to buy classic gold bullion bars, with 24ct purity and fineness of 999.9. These gold bars are available in various weights: 100 grams, 250 grams, 500 grams, and 1000 grams. As special details, these gold bars are engraved in an elegant manner. They can be delivered to the clients or deposited in the vault of the company, in maximum security conditions. Often these companies are offering free storage.

If you don’t dispose of a big sum for investing in gold, but you want any way to save some money, the solution for you is buying pooled gold bullion bars. You will buy as much as you afford to and share the property of bullion with other clients. Due to their nature, these gold bars can’t be delivered, but the investment is safe and guarantees your profit.

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Reason Why Investors Should Own Precious Metals

Gold and silver have been a store of value and a medium of exchange for literally thousands of years. As assets, these two precious metals have certainly had their ups and downs in recent decades. But why consider them today? Are they better or worse than other asset classes (such as stocks or bonds) in today’s uncertain economy?

There are always advantages and disadvantages to acquiring any given asset or security when the goal is wealth-building (or wealth preservation). We know that when times are good, and the economy is roaring along, stocks tend to do very well. When times are bad and the economy seems to be hitting a rough patch, conventional wisdom has been to keep more money in safer venues such as government bonds or bank certificates of deposit (CDs).

Every asset has strengths and weaknesses and it is up to the investor (and/or their advisor) to figure out which asset is preferable at a given. For 2010, and beyond, there is a solid reason why gold and silver are strong considerations for investors concerned about today’s economy and financial markets.

Although the typical reasons given for investors to consider owning gold and silver are that they are traditionally good hedges against inflation and market turmoil, there is another reason that is often missed… even by financial planners and experienced investment pros. In today’s market environment, this may very well be the most important reason of all to consider precious metals.

Counter-party risk. It sounds odd but it is probably the most important reason why investors should add gold and silver to their portfolios. Specifically, I am referring to gold and silver physical BULLION. In other words, gold and silver physical coins and bars are purchased from reputable dealers. Why?

One of the most desirable benefits of owning gold and silver physical coins and/or bars is that these two metals do not have “counter-party risk”. Counterparty risk is the risk that the counter-party in particular security will be not able to live up to its’ promise or performance. Virtually all paper assets (stocks, bonds, mutual funds, and even bank investments and currencies) have counter-party risk. If you are still a little unsure of the concept, let me give you some examples.

  • When you own a stock, there is counter-party risk. The stock is only as valuable (or desirable) as how well the company involved is performing. If the company is doing well, the stock will continue to have value. However, if the company is in trouble (financial or otherwise), or it is in danger of bankruptcy, then the stock will lose value. Ultimately, if the company goes bankrupt, the stock becomes worthless. Example: Enron or Bear Stearns.
  • When you own a bond, it has counter-party risk. What happens if the bond issuer goes out of business or refuses to pay back the principal and/or interest? Then the bond loses value and it could become worthless should the bond issuer not make good on the promise to pay the bond (and interest) in full. Example: Bonds created from sub-prime mortgage securities.
  • When you have money in a mutual fund, hedge fund, or some third-party manager, there is counter-party-risk. What if that fund goes out of business? What if their portfolio is loaded with bad Securities? What about fraud? Example: Bernard Madoff.

I think that you are getting the picture. “Paper assets” have counter-party risk. That risk is not limited to just stocks, bonds, or funds. In recent years we have learned that sometimes your money is not safe in a bank. In addition, even cash itself can have counter-party risk because of inflation. When governments crank up the printing press to unleash hyperinflation (as in Yugoslavia in 1989-94 or Zimbabwe 2006-09), the currency becomes worthless overnight.

Gold and silver do not have counter-party risk. They have their intrinsic value and that value is not dependent on another party’s promise or performance. Remember… physical bullion since owning stock in gold and silver mining companies has many of the same counter-party risks that any other stocks would have.

Part of the reason that precious metals have this unique quality is that gold and silver can not be created out of thin air by any government. Both are finite in supply and it is not easy to extract them from the earth. Annual mining only adds about two percent to the world’s above-ground supplies.

Next time you hear the word “diversification”, think “outside the… uh… paper box”. Don’t just diversify among paper assets since the portfolio would still be exposed to counter-party risk. Add non-paper assets like gold and silver for more assured diversification.

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New Studies in Development

FMCSS is an international web community for scholars and others interested in asset prices and asset price studies. Here you can read news related to the field and keep track of conferences, call for papers etc.

It is a administered by Centre for asset pricesn Studies Copenhagen-Lund (CSS), a collaboration between institue for advanced thinking about investing and commodities, University of Goergia at Auburn, Affiliate University.

If you have any questions regarding FMCSS or want to come in contact with Centre for asset pricesn Studies Australia – Affiliate University please email us at paper@sendusacopy dot com.


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