For many investors, the current price of gold is a barrier to purchasing this great precious metal. However, there are a variety of ways to purchase gold inexpensively for those who really want to. Gold is available to be purchased in smaller amounts than most people think. Coins and bullion can be purchased in quantities of less than one troy ounce, which is a typical quantity for many investors. Gold is available in sizes of 1/10, 1/4, and 1/2, which is very affordable even at current gold prices.
Despite the fact that investing in gold is more expensive than other precious metals, investors still prefer it as the metal of choice. Gold is commonly used to make jewelry and for artistic endeavors, but it is primarily used for investing. A commodity is something that is consumed by the industry and whose prices rise and fall with inflation. But is gold in the same league as nickel, iron, zinc, and copper? They all tend to move in the same direction, but gold is not primarily for industrial use as these other metals are. Gold actually behaves more like currency than like a commodity. Even in times of inflation or deflation, gold prices still maintain record highs. Rather than being affected by inflation, gold tends to move in the opposite direction. It is the U.S. dollar that seems to affect gold prices more than anything.
Current gold prices are tied to the value of currency and are driven by economic instability. They normally reflect the market’s concern for the potential diminishment of the dollar. Because gold isn’t easily manipulated, investors typically gravitate toward gold as a hedge in case currency should ever lose its value.
Prices can rise and fall even when the economy is in good shape. This is because the price can fluctuate due to a variety of factors such as investor demand. Gold is a sensible investment even when times are good. Rather than being a hedge against inflation, it might be better to state that gold is a hedge against the government. Current gold prices are high and this reflects the fact that it is in demand. This is the case because investors do not trust the government. When gold prices fall, confidence in the government has once again returned, which is not very likely. For this reason, gold will always be a popular investment vehicle.