Gold Bullion as an Investment Opportunity

The opportunity for gold in the investment sector is significant and continues to look better each year. Over the last five years, total identifiable investment demand has grown over 300% and is the fastest growing category of global gold demand. However, gold represents less than 1% of total global investment assets, meaning that the market opportunity for growth in gold investment is still significant.

It is a hard asset that carries no default risk. One of its primary roles is that of an insurance policy, providing protection during times of widespread weakness in other asset prices. However, there is no doubt that gold has an important role to play regardless of cyclical factors or economic conditions.

Gold’s role as a hedge against inflation is well known, and there is no doubt that concerns about inflation have played some part in gold’s popularity. Gold’s value endures across time and geography, and protects investors against the internal (inflation) and external (exchange rate) depreciation of their currency. A recent study by the World Gold Council shows that gold has a role to play both as a tactical inflation hedge and as a long-term strategic asset.

In contrast to the purchasing power of many currencies, the value of gold, in terms of the goods and services that it can buy, have remained remarkably stable over the long run. Recently, the gathering storm over Greece’s public finances and debt contagion fears in Europe and the US has led to strong gold investment demands. Net retail investment in 2011 was 26% higher than for the same period during the previous year – resulting from an increased appetite for gold in traditional markets such as India and the growing importance of Chinese demand for gold, underpinning a reawakening of retail demand in Europe over recent years. Central banks throughout the world continue to purchase gold at record rates.

 

More information can be found online at http://www.goldbullionadvisors.com