Category: Gold

Factors that influence the Gold rate

Factors that influence the Gold rate

Investing in gold and comparing different gold rates to each other, is completely difference then comparing insurances. When comparing carinsurances, you’ll find relatively standard rates. Gold rates in contrast can fluctuate strongly. How is it possible, that the gold rate at one moment is low, while at another moment it reaches record heights? Several factors are involved.

Gold rate

The price of gold is also referred to as the gold rate. The gold rate represents a certain price used to buy and sell gold. The gold rate is most often expressed in American dollars and the American weight unit ‘troy ounce’. One troy ounce equals 31,103 gram. A lot of golden coins contain exactly 1 troy ounce of gold. There is not one universal gold rate! The Kitco-rate is a goldrate which can be tracked by anyone. The rate is expressed in dollars & euro’s and is updated constantly. The Reuters gold rate is a rate only visible for a handful of leading corporations. This is the rate used by the biggest banks and gold melting houses.

Demand & supply

The most important factor that influences the gold price, is the supply & demand of gold. The more demand for gold, the higher the price will become. The demand is influenced by banks and traders. If they show a growing demand, the price will automatically go up. When suddenly a lot of gold enters the market or new gold is found, the price will decrease. Not a lot of new gold is entering the market anymore. Less and less new gold sources are discovered. Also the costs of mining and producing have increased.

Economy

The demand for gold is an economical situation in essence. It’s common people resort to gold when the economical sitution is worsening. Gold always will maintain a certain trustworthy value. In economically bad times, there is a lot of demand to gold and the gold price will actually rice. This same effect is visible when there is political turmoil. Against political turmoil, the stable factor of gold offers

Monetary Policy & Federal Reserve

The monetary policy determines the interest rates in this modern age. Interest rates influence the gold price. The interest is a small commission that investors get to take risks. However, a lot of interest rates are under the level of inflation. This means there is a negative real interest. With such negative real interest, it’s often safer to buy gold instead of losing money by taking risks. The Federal Reserve, as the biggest and most important bank in the world, has a big influence in interest rates. By making policy and sharing their view.

To Buy Gold Wisely: 5 Essential Tips From Insiders

To Buy Gold Wisely: 5 Essential Tips From Insiders

Gold is magically attractive. Already more then 5000 years we are fascinated and attracted to this shiny noble metal. We buy gold in the shape of jewelry or were using golden coins as a mode of payment. Gold throughout history has been the symbol for abundance & power.

Buying gold nowadays is often done as an investment or as an alternative for saving money. Where savings accounts almost don’t give any interest any more – soon in some countries the interest might be negative – gold is an interesting alternative. An investment in gold helps to spread, what is very important in volatile and insecure times. Gold has proven to always maintain its purchasing power and be quite stable in value, where worldwide currencies & stock markets can vary in value rigorously.

The gold rate has been rising the last 10 years with more then 85% and investing in gold becomes normalized. Partly because of the rise of the internet it’s now possible for small investors and savers to, easily, buy gold online and have it deliverd at home. Or to have the gold stored in a secure safe.

A lot of people haven’t bought gold before and have a certain idea which is based on a variety of objections. How safe is it to buy gold? How do you know that you don’t receive fake gold? Are you considering to buy gold, then the following 5 tips are for you!

Tip 1: Take care that you have physical access to the gold

The most important tip for buying gold is to make sure that you actually are transferred real gold. There are many ways to invest in gold in which the gold only exists on paper and you’d never get a real chunk of gold or golden coin in your hands. Such investments come with risks. A good example of such ‘paper gold’ is gold that can be bought directly from mines in Africa, with a huge discount on the gold rate. Such offers sound often too good to be true, and they are! In a recent research it was shown that since 2015 minimally 50 million has been invested by investors in such type of products. Only a small portion of this money has truly been used to invest in African mines.

An estimated 100 times more gold is traded on paper then there is physically available world wide. Buying gold in a digital form, so through futures and EFT’s, is accessible and simple. It however does NOT give you the right to physical gold. Such investors are more suitable to speculate on a rising gold rate, while not suitable to protect your capital.

Always buy gold from a trustworthy supplier that delivers physical gold. The reliability can be checked by the reputation of the supplier. Big suppliers often have a lot of recent reviews of customers online with high scores. Being able to directly deliver from stock is a sign of reliability. A long term of delivery is uncommon.

When buying for athe first time, you could of course also choose to directly pick up your older at the supplier. And pay there.

Tip 2: Choose well known coins or bars

When you’ve made the decision to invcest in gold, you’ll find there’s a lot of different coins and bars available from different weight and composition. What is a good choice? Depending on your budget you should choose between golden coins or gold bars.

Investors with a big budget often choose for gold bars, because the extra costs of these are low. They buy bars of 1kg of pure gold, worth close to 4 million INR. A disadvantage is that when you want to sell, you can sell it by the kilo. You can’t saw a tiny piece of the gold bar.

A more practical alternative are golden coins, which are specially made as an investment coin and are not a valid currency. The most famous coins are the golden Krugerrand and the golden Maple Leaf. These coins are sold with only a little bit of commission and are so liquid that it will be easy to sell them again.

Whatever you choose, make sure you know beforehand the prices for buying and selling. This way there will be no unpleasant surprises when you try to sell the gold.

Tip 3: Don’t check the gold rate too often

The gold rate is moving every day and can swing a lot. It can be very tempting to sell the moment that the gold price is very high, to make profit. Remember that buying gold is a rational consideration, based on protecting purchasing power en to save money and capital. So the tip is to not check the gold price to often, and develop a long term vision.

Keep the gold in your possession for a longer term. Especially when you’ve bought physical gold, there are some extra costs involved. These don’t fit the short term point of view of selling when the rate is rising and buying when it’s decreasing.

The gold price can be really volatile and is not easily predicted. The gold price raised with about 8% when it became clear that Donald Trump won elections in 2016. Several months later, the goldprice had returned back to the level of before the elections.

Would you like to ‘time’ your purchase? Consider to buy the gold in phases: by investing a part of your budget in gold every two/three mnonths, you can average the purchase price over a longer period of time.

Buying gold should be viewed as a rational long term choice. Common advice is to invest a maximum of 5 or 10% of your portfolio in gold.

Tip 4: Store It Safe!

After buying gold, the next challenge is to find the right place to store the gold. Private individuals often choose to store their gold at home. This is perfectly fine, especially when the value is not too high. If the investment is too big for you to be comfortable with this, specialized companies exist for storage.

Partly gold is bought to keep capital outside of the financial world. Because of this, it’s not recommended to store your gold at a bank. Certainly you took money from your bank account because you don’t want to depend on banks, currency, etc. In the past there have been plenty of bail outs and bail ins of banks. Therefore it is not recommended to store at the bank.

Tip 5: Keep Your Gold Secret

The less people know that you own gold, the safer it is. It seems obvious, but it can be very tempting to share with other people that you own gold. Especially if these other people are also getting interested in gold because of the rising gold rate.

When the bitcoin hype was beginning of 2018, a lot of people shared they invested in bitcoins and other crypto currencies. People that actually got rich from it were wisely silent. The risk of your gold being stolen of course increases when you share that you buy gold. Be safe & wealthy!

Carat gold: What’s the difference between 14, 18 & 24 carat gold?

Carat gold: What’s the difference between 14, 18 & 24 carat gold?

The pureness of golden jewelry is expressed in carat gold. But what does this mean? And, what is the difference between different carat gold, like 14, 18 & 24 carat? And, why are there so many differerence between carat of gold? Read on to learn more about carat gold and why it is so important. Because, when you have or want to buy a golden piece of jewelry, of course you’d like to know everything about it!

What is carat gold?

The term carat indicates how much pure gold is used to create a jewelry. 1 carat is 1/24th part of pure gold. A piece of jewelry of 24 carat gold consists completely of gold, while a piece of jewelry of 14 carat gold consists of 58,5% of gold (14/24 = 0.585). 18 carat means it consits of 75% of gold (16/24 = 0.750). The rest will be supplemented with copper and/or silver. Because of these percentages, 14 carat gold is also referred to as 585 gold and 18 carat gold is also indicated with ‘750’. Adding copper, silver and or palladium to gold is referred to as an ‘alloy’.

These are the most common gold carats:

  • 24 carat gold: 99,99% pure gold (indicated with 999)
  • 22 carat gold: 91.6% pure gold (indicated with 916)
  • 20 carat gold: 83.3% pure gold (indicated with 833)
  • 18 carat gold: 75% pure gold (indicated with 750)
  • 14 carat gold: 58.5% pure gold (indicated with 585)
  • 9 carat: 37.5% pure gold (indicated with 375)
  • 8 carat: 33.3% pure gold (indicated with 333)

In some countries 9 and 8 carat gold may not be called gold, because of the fairly low amount of actual gold in the alloy.

Why are there different kinds of carat gold?

In short: how higher the carat, how more pure the piece of golden jewelry is. A piece of jewelry of a low carat can be much cheaper because of this, than a piece with a higher carat.

It doesn’t mean that a higher carat is per definition better: adding copper and/or silver is done with an even more important reason then decreasing the price: pure gold is soft. By adding other metals, the gold becomes harder. Without the addition of these metals it’s difficult to make a golden piece of jewelry, and when it’s made it will bend more easily, and break sooner. The higher the carat of gold, the softer it is. The lower the carat, the stronger it is.

What is the influence of carat gold on the price of a golden piece of jewelry?

The higher the carat, the more gold is in the piece of jewelry and the greater the value is. This rule is not always valid, these are some aspects to take into account:

  • The quality of the piece of jewelry: a massive 14 carat gold bracelet can be more expensive then a hollow one of 18 carat gold. Also a wider one can be more expensive, while of lesser carat.
  • The cost of making & designing: when a 14 carat gold piece of jewelry is very difficult to make, this can increase its price to above a piece of jewelry of 18 carat gold that can be made easier.
  • The gold price: different moments in time will know a different price of gold.

Do different carats have a different color?

When a piece of jewelry has a higher carat, the golden color is deeper. When copper is added to the gold, the alloy might get a warmer color. When more silver is added, it will not look warmer. Expecially 9 or 8 carat gold pieces of jewelry can have a warm look because of the large amount of copper added. By adding a lot of copper to gold, it’s possible to make rose gold. With a high amount of silver and/or palladium, white gold can be made.

Gold, an expensive precious metal

Gold, an expensive precious metal

A precious metal does not or nearly not connect with oxygen (rusting, or oxidizing). That’s why a precious metal always stays beautiful! This makes them incredibly suitable for making jewelry.

Gold and platina are the most famous examples of precious metal. These metals always stay beatiful. Silver is a little bit less precious, or noble, and will slowly connect itself to oxygen. Silver jewelry eventually will turn black. Polishing will let the old shine return. Metals like iron and copper will over time connect with oxygen, and form a brown or green rusty layer on the surface. At last these metals will completely dissolve.

Precious metals are tradionally used as a means of trade. This is because these metals are quite rare compared to other metals. They didn’t decrease in quality to soon and their worth was stable. Precious, or noble metals, were used as moneybill’s nowadays. Even when paper money was introduced, its worth was related to precious metals. The golden, silver and double standard.

Gold is a soft metal and is used as alloy for jewelry. The composition of the alloy determines the final color of the gold (yellow, white or rose gold). The melting temperature of gold is around 1100 degrees of Celcius.

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