Dec 21, 2012

Posted by in Commodities | 0 Comments

A Good Time For Some Gold Investment Advice

Avoid the Hype with Gold Investment Advice

gold investment adviceThere are a lot of people who offer gold investment advice. Of course, most of them are also companies that sell gold. As a result, the advice they give is always to buy more gold right now. Gold has been a pretty good investment over the past several years, but there is a definite point at which what comes up must come down again. The question therefore becomes one of deciding how much higher gold is likely to go, or is it already on the way down again. For those who have an interest in buying some physical gold, here are a few things to think about.

Some Gold Investment Advice Factors to Consider

• Given the continuous deficit spending by virtually every government in the western world, some level of inflation is bound to continue into the indefinite future. This is generally a bullish indicator for wealth preservation assets such as gold.
• Gold purchases are based on what is known as the daily spot price. Based on, however, is not the same as equal to the spot price of gold. In fact, the price at which dealers buy and sell gold is never the spot price. Dealers make their money on what is known as the spread. They buy gold at a certain percentage below the spot price and sell at a certain percentage over the spot price. This is usually a 10% calculation in either direction. As a result, if you want to buy gold and then later sell it at a profit, gold will have to go up a minimum of 20% just for you to break even on the transaction.

Genuine advice therefore revolves around a determination of how much higher one expects the price of gold to reach.  With gold at approximately $1700 an ounce at the time of writing, the spot price will have to break the $2000 an ounce barrier just to get your full investment back. If you want to make a profit of 10%, you will need for it to go to more than $2400. The best gold investment advice is simply that you do your homework, rather than let some paid-by-commission salesman stampede you into an investment you do not know all the facts about.

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