Gold Gold

gold investing

Gold Investing: For over four thousand years gold has been regarded as a form of money and store of wealth. The use of gold superseded alternatives for a number of reasons including its rarity, luminosity, character (weight, softness), malleability, fungibility and resistance to tarnish.
Since the end of the Bretton Woods system in 1971, gold has largely lost its role as a form of currency. It is still considered by many, especially by central banks, as a store of value and a safe haven in times of crisis. Gold and other precious metals are unique assets in that they are tangible (i.e. physical, real) and liquid (i.e. easily traded), unlike real estate which is real but not liquid, or company shares and bonds which are liquid but not real (i.e. a share certificate is just paper). Other traders and investors see gold as nothing more than just another commodity, such as copper or lead, and treat it as such.
Investment in gold can be done directly through ownership, or indirectly through certificates, accounts, shares, futures etc. However, gold's benefit as a secure asset may only be truly realised when directly owned and stored in bullion or coins. Most investors would not recommend storing gold oneself (e.g. in one's home or buried in the garden) but to use a bank or dealer. Other than storing gold in one's own safe deposit box at a bank, gold can also be placed in allocated (also known as non-fungible), or unallocated (fungible or pooled) storage with a bank or dealer. In the unfortunate case of the latter going bankrupt, the client will be unable to claim the gold and would become a general creditor, whereas gold held in allocated storage should be returned to the client in full. However even with gold held in allocated storage, many gold bugs would still choose their storage provider carefully, making sure of high net worth, with some preferring an offshore bank or storage facility.


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