Last Updated on Sep 21, 2021 by James W
For years, gold has remained the indefatigable investment option for people who want protection from inflation, especially during recessions. For others, it is the thrill of touching gold that gives them satisfaction. Whether you want to invest in gold with the aim of reaping some returns or simply get a unique satisfaction, it is important to start by understanding it well. Keep reading as we demystify gold bars to determine where they get intrinsic value. Finally, we will tell you the most secure way to buy gold bar.
Why is Gold valuable?
In history, gold’s luster and malleability made it a good option for making jewelry and much later, coins. However, digging gold from the ground was so challenging, resulting in low supply that pushed the value up. Even when the monetary papers were adopted to facilitate trade, they were backed by gold. The link between gold and fiat money got broken with the rise and efficiency of paper money. However, people still love gold and they always invest in it.
The highest demand for gold is mainly from the jewelry industry, covering about 50% of the global demand. Trailing the jewelry demand is direct investment which accounts for 40%. The demand for gold investment is mainly in gold bars and bullions. When we talk about investors, some of them are large scale dealers, such as exchange-traded funds and central banks.
Other players that help increase the demand for gold bars include dentistry, tech gadgets, and heat shields.
What is the Total Quantity of Gold in Nature?
There is actually a lot of gold in nature, but extracting is very complex and pricey. Make sure to differentiate between two terms, how much gold is there in the world and the available gold. It is estimated that there is approximately 54 000 metric tons of gold, which can be viably extracted. Advances in technology have made it possible to extract more gold. For example, some companies are even able to harvest gold as a by-product of copper mining.
Gold Bars Value During Recessions
One of the main reasons investors buy gold bars is to protect their investment during inflation or recession. So, how well does gold hold its intrinsic value when a recession hits? Here is an example of the gold value movement during the 2007-2009 recession.
Between November 2007 and the close of May in 2009, the S&P 500 index plummeted by 36%. This could mean serious losses for people who had invested heavily in stocks. However, the price of gold shot up by 25% during the same period. Simply put, when economies are in turmoil, the value of gold tends to shoot up.
How to Buy Gold Bars
Now that you know the main drivers of gold value on the market, the next thing is buying gold bars. Although the process of buying gold might appear complicated, it is not. It is like placing an order for an item online. So, here are the main steps to follow:
- Decide you want to buy gold bars and set aside a budget. You might want to check the present gold prices on the market.
- Install a good storage unit. Because of its high value, gold can easily be stolen. Therefore, install a secure storage facility at home. You might also want to consider commercial repositories, but you will be charged a fee for storing the gold.
- Identify a good online dealer and place your order: There are many sellers of gold bars online and it is important to select the best. If you select a good seller to buy gold bar, it will be shipped to your secure location.
As you can see, buying gold bars does not have to be complex. However, you need to be extra careful to avoid scammers targeting to defraud you. One of the dealers you can trust for high-quality gold bars is GoldAvenue.
