The price of gold has increased at an increasing rate over the past years. This has also been the case for the price of silver. Most of the market indicators such as commercials, advertisements, and other business projection articles, projects an increase in the price of both gold and silver. For investors, this might seem like great news since 2018 will be their time to invest. But, is this really the case? Let us look at other factors that will help you to decide whether to invest in gold or silver.
Investing in Silver and/or Gold
There are two main reasons why one may invest in gold and silver; they hope to gain money or not to lose money. Both factors are unpredictable. Apart from their monetary value, silver and gold have practical uses and can be used to make jewelry, as a decoration, and in other industrial processes. When compared to a business, owning gold or silver may prove to be of no use. For example, while a business is generating profit that is used to open up other businesses, the gold or silver piece will be collecting dust since you have no control over its market price.
Why invest in gold and Silver? Is investing in Precious Metals Worth the Risk?
Buying gold is a risk that can only be determined by the risk taker and the end benefit. Precious metals items such as silver, gold, and even platinum tend to defy market trends. For instance, gold price may rise while the market prices have dropped, like in the case of 2008. Such patterns increase the risk of the investment. However, you can diversify your investment into other investments such as bonds, stocks and other commodities that will help you reduce the risk of losing all your money.
It is hard to predict whether the value of gold and silver will appreciate or depreciate. There are various factors that affect the value of these items such as mining and refining. When the mining becomes scarce or less precious metal is produced during refining, the value will depreciate and vice versa. You cannot predict this. Furthermore, the price of gold and silver may increase or increase due to the demand for the item. An increase in demand will increase the prices while a decrease will lower it. You cannot predict these factors either.
The market value of both gold and silver can also remain stagnant; the price will neither increase or decrease. For instance, the value of $1000 in gold bullion today will still be $1000 in the next five years. In this case, you will not suffer the effect of inflation, and you will have your money. But, will you have gained anything? Was your aim of investing to evade the effects of inflation?
While you are assessing the unpredictable market of gold and silver other businesses that are still worth the risk are making great returns yearly. The investors earn the profit in the form of stock buybacks, dividends, or other investments that they use to earn more money.
How Do You Sell Gold?
How can you exchange gold for money? Is it easy? What if cash is unavailable? How will you trade a bar of bullion for another item? This is how you generate wealth by keeping tabs on the current market trends. Find out more about gold in the next article.