Why buy gold?
The recent US Federal Reserve interest rate cut, high oil prices and global economic growth had help push the price of gold. According to analysts, the price of gold could hit the US$1000 mark. It is currently at US$752.80 an ounce. This means there is a potential gain of 25%.
At goldsmith shops, the prices are at $43 per gram, up from $34 per gram. Apart from buying and selling gold at goldsmith shops, some people redeem their gold jewellery and re-pawn them to take advantage of higher prices, though I am not sure how they can win because they will have to pay more to redeem their gold.
What does this mean for the ordinary investor? It is good to have a diversified portfolio. While stocks can get worthless, having the physical product of gold will ensure that you still have the metal even if prices fall. That is unless of course gold went out of fashion in the last few years, though some cultures still greatly value gold.
Since the market continues to be volatile, buy only when the value is low, and sell when it is high.
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[…] addition, the reason why prices of gold is so high is due to the rise of oil prices. There is a rise in inflationary pressures around the […]