Gold for Investors

Gold is unique among the natural elements. Not only is it rare, but it does not corrode, yet it is infinitely stretchable and malleable. It cannot be magnetized, dissolved in acid, or destroyed by fire. It is one of the few elements suitable for industrial and decorative use. It has been coveted and valued since man first discovered it, and he is always finding new and exciting uses for it. This is why it has always been an excellent metal for storing, retaining and growing wealth, and why it has always been a point of investment for persons, nations and corporations.

Why invest in gold?

The biggest advantage that gold has over all other investment opportunities is that it almost never loses value. There is a very small quantity of it on earth, it is difficult to obtain, and it is useful for both decorative and industrial purposes. This means that, regardless of world politics or fluctuating currencies, gold retains its value. This makes it a particularly good investment in times of uncertainty, such as war or financial collapse. It is also an ideal investment for retirement accounts, since it is immune to market fluctuations and thus will preserve wealth until it is needed.

Investing in gold: procurement v. possession

There are two ways to invest in gold – its procurement and its possession. To invest in the procurement of gold, it is necessary to invest in the companies that extract it from the earth. While historically gold may have been obtainable by panning or surface mining, gold rushes in the 19th and 20th century exhausted these surface supplies, and the remaining deposits must be harvested from deep within the earth. These deposits are formed by tiny microbes which live in the rock where the gold is found. They extract the gold from the rock and excrete it as waste, because they cannot absorb or digest it. These tiny deposits from into tiny veins within the gold ore, which must be extracted through various industrial processes. Because gold is very resistant to being dissolved, this is an exceedingly labor-intensive process, and many tons of ore must be processed just to make a single ounce of gold.

This is why so many of the other procurement companies focus on gold retrieval, more commonly known as gold recycling. Gold is present in everything from jewelry to electronics, and these things are routinely thrown away, lost, or discarded by accident. This means that large amounts of otherwise valuable and useful gold end up in landfills and recycling centers. The gold retrieval companies buy this garbage and process it through a series of combustion and acid dissolving refinements, until all materials other than gold have been removed. This is increasingly becoming a very profitable form of obtaining gold, since more and more electronic devices need trace quantities of gold in order to function, and such devices are routinely discarded due to breakage or obsolescence.

Investing in gold procurement companies, whether they focus on mining or recycling, is an excellent way to invest in gold indirectly. These companies tend to be very long lived, and so getting in early can yield big dividends. While there is a risk of loss inherent in investing in any stock, gold procurement companies tend to be very stable, and their value actually rises in a recession. This is because investors turn to gold in times of trouble, and the companies who procure gold thus see a huge upsurge in investment when the product they produce becomes more valuable.

Investing in gold possession

However, many investors choose to invest in gold directly. Not only does this insulate them from problems inherent in the mining and procurement of gold (mines play out, companies go bankrupt) but it ensures they are left with a valuable product that will always meet or beat inflation. There are two ways to do this: via gold certificates and via actual gold itself.

Gold certificates, in their various forms, are negotiable papers which certify that one owns gold which is safely stored elsewhere. This form of buying and selling gold was developed during the 16th century as a means of enabling those who invested in gold to avoid having it stolen. Gold certificates have no value to anyone but the true owner, and enable one to own vast quantities of gold without the risk of loss due to theft or disaster. Gold certificates can also be purchased through IRAs and other investment accounts, enabling the buyer to get special tax breaks. For these reasons, gold certificates and other gold-based investment packages are the most common ways one invests in gold, since it ensures the safety both of the gold and of the investment in that gold.

Of course, many investors need the physical and psychological comfort of real gold. While jewelry is usually a poor investment (as it is valued for aesthetics instead of gold content) many governments and companies produce standardized coins and bars which make excellent investments. Although taxed at a higher capital gains rate than gold certificates, they nonetheless serve as excellent investments, meeting or beating inflation. They also make excellent items to leave in a will or trust, since they can beat or avoid many inheritance taxes as well as preserving value.

When should I invest in gold?

Whatever means an investor uses to invest in gold, the time they should do so is immediately. Money loses value over time due to inflation, but the value of gold is immortal. Gold cannot be artificially synthesized and thousands of years of attempts to imitate its properties have come to naught. Therefore it will retain its value indefinitely, and will only become more valuable over time. While this is great for persons currently invested in gold, those who are missing out will only see the price of gold go up over time, making it more difficult to invest and reducing their yield more and more each year. Therefore if you wish to invest in gold, talk to your investment broker or accountant today and see what sort of options are best for you. Whether it be in procurement companies, gold certificates or coins and bars, you can’t lose when you bet on gold.