The
price of gold is decided by purity and its weight. Pure gold, also
known as 24K gold, is very malleable and ductile. However, when it is
made into an alloy, whether 18K (75% gold) or 14K (58.3% gold), it is
more durable and practical for everyday use.
Creating consumer-ready gold is a process that involves three steps: prospecting, extracting, and then refining gold.
One
of the most difficult phases of creating processed gold is finding it.
There are a variety of ways to find gold, such as gold panning, metal
detecting, sluicing, dredging, and mining. Panning for gold is easiest,
but mining is the most practical for large-scale production. With
mining, geologists search for of gold in rocks and soil. If there are
indications of gold, scientists drill samples, take them to the lab, and
analyze their gold content. Next, if samples turn out positive, miners
will take some of that rock from the ground. They now need to isolate it
and refine it into actual gold. First, the large chunks of rock are
broken down into smaller pieces by crushers. Once the ore becomes a
powder, it is put into water to form a pulp. This liquid runs through a
leaching tank, which dissolves the gold out of the ore through the use
of chemicals. (Usually, cyanide is the most common solvent used.) Then
comes a filter, which prevents the pulp from passing but allows the
dissolved gold to go through. The last procedure called electro-winning
delivers an electric current to the liquid to remove any last leaching
chemicals. Later, gold is melted into chunks and is shipped off to other
refineries for better processing.
Refining
gold is the last stage of gold production. It removes impurities that
may be left in the gold. First, gold must be completely melted, which
usually happens at 1102 degrees Celsius. Once everything is melted,
borax and soda ash are added. Next, the liquid gold is poured into a
mold and is left to settle, where the larger impurities settle on the
top, and the dense gold sinks to the bottom. Once everything hardens,
the gold would form the bottom layer of the molded substance. It can
then be broken off from the rest of the impurities. Later, the gold
might need to be remelted and purified once again.
How can you invest in gold?
You can buy physical gold or own gold through paper documents (shares and certificates).
Investing
in Gold is like any other investment in which investors must recognize
from the start that things may not turn out how they expect. Investing
in gold in the future does not look like it will go away. The one main
advantage about investing in gold is that it has not gone down to zero.
This is not to say that is will not be volatile and go down but it not
likely to be worthless or go bankrupt on you like a stock or a company.
Advantages of Investing in Gold
One
of the advantages of gold is that it is easy to liquidate. It is the
most liquidable hassle free physical assets to liquidate in the world.
Prices can be checked with ease via the Internet and calculated with
precision.
Disadvantages of investing in gold
Although
gold investment does have profits, there are also some inconveniences
that come with it. Investing in an actual piece of gold, either as a
coin or a bullion, is subject to hidden costs of buying and selling.
When a gold coin is bought or sold, mandatory fees must be paid.
Furthermore, the owner must find a safe location to store the gold,
whether in a safe or a safety deposit box at the bank. Without a secure
location, it is possible that anyone might steal the gold. Unlike gold
stocks or bonds, gold certainly can be misplaced or taken by a burglar
or thief. Lastly, there is a possibility of gold rates lowering. Gold,
like all investments, can take a downturn depending on complicating
factors in the global economy.
Ways of Investing in Gold
There
are a number of methods to invest in gold. Such as actual pieces of
gold in the for of coins, bullion, jewelry. You can also invest in
indexes or gold stocks.
For
convenience, gold indexes and stocks are great! Gold stocks are easy
to buy and easy to sell. For adornment and profit potential; rare gold
coins and jewelry have great potential but also great pitfalls.
People
may not consider buying gold stocks, as it is directly correlated to
the price of actual gold. As gold prices continue to increase, so will
the stocks, sometimes even more so.
Personally,
I think that gold stocks are the most convenient method to invest. The
price of gold stocks are related to the price of actual gold. When gold
prices are high, gold stock indexes rise, sometimes double the amount of
gold depending on the stock. Furthermore, with stocks, you avoid any
hidden costs. It is simple to buy and sell stocks at any moment and at
any price since you do not need to find a buyer. Buying stocks has all
the benefits of buying actual gold, but it is easier to facilitate a
transaction. For an investor with little experience in the field of
gold, buying gold stocks is less of a hassle yet the most profitable way
make money.
Best way to Invest in gold
There
isn’t a best way to invest in gold. It’s more a less of a personal
choice. I prefer to invest in gold via jewelry as I have advantages for
selling it for profit potential for the design.
When
buying any gold coin, there is a transaction fee that is also attached.
This may be 3 to 5%, depending on the seller. Purchasing a Canadian
Maple Leaf coin usually has the least hidden costs, although other sales
would certainly have them. These prices become burdensome, especially
if purchasing a large number of coins. However, some people prefer
purchasing coins because of the emotional attachment to them. Instead of
having a symbol of gold possession, such as a stock certificate or gold
bond, the owner actually possesses the real gold coin.
Furthermore,
other coins available are collectors items, so they may be worth even
more than just its weight. In these instances, the convenience fee is
very little in respect to their initial reason for purchasing a coin.
Personally,
stocks are the most convenient method to earn profit from gold. The
price of gold stocks are related to the price of actual gold. When gold
prices are high, gold stock indexes rise, sometimes double the amount of
gold depending on the stock. Furthermore, with stocks, you avoid any
hidden costs. It is simple to buy and sell stocks at any moment and at
any price since you do not need to find a buyer. Buying stocks has all
the benefits of buying actual gold, but it is easier to facilitate a
transaction. For an investor with little experience in the field of
gold, buying gold stocks is less of a hassle yet the most profitable way
make money.
Conclusion
Overall,
all investors should primarily understand the pros and cons of gold
investment before becoming involved in an unknown situation. Without
understanding the fluctuation of gold, one would only be putting himself
or herself into a risky investment. Gold certainly can face decreases
in price, and the market can even lower without any signs. However, this
sort of risk factor is applicable to all investments. Gold will not
become a 0% investment, and it will never become negative.
