Tuesday, October 11, 2011

Should you invest in gold or silver? | China View|China auto;China ...

t is reall? important for an investor to first understand the econom? and the financial s?stems prevalent in the market before he decides what to invest in. With the cost of crude oil having increased considerabl? per barrel, the government has also acted b? increasing the price of petrol and diesel severel?. Other stocks are now rall?ing to catch up with these prices.

Should an investor bu? more gold or silver?

According to a research concluded earlier this ?ear, precious metals were the best performing assets for the second consecutive ?ear and also for the fourth time in the last five ?ears. Investors enjo?ed a 42% return b? investing in precious metals in 2010.

Silver performed much better than other precious metals in the market in 2010 with prices rising b? an astounding 80% which is two and half times the rice in price of gold (29%). Along with being deemed a safe investment, the relativel? low suppl? of the metal as compared to the high demand has also contributed to the stead? increase in price. In the first two months of 2011, silver?s price has increased at a stead? 9.3%.

Judging b? the present market scenario, investing in precious metals will be a ver? wise decision. Currentl? it seems like silver is as good or even a better bet than gold for investment.

What are the parameters one should consider before investing in gold or silver?

One of the main reasons investors prefer investing in these two metals is the stabilit? witnessed in the market. Liquefaction is also an eas? process for gold or silver bars and coins. Do note that purit? of the mineral is of utmost priorit? and should be given its due importance.

Another important factor governing the decision on whether to invest in gold or silver is the price. Though the variation in the price of gold or silver is not as unpredictable as that of shares and equities, there still is a noticeable difference on a dail? basis. However, when ?ou are investing a large sum of mone? then this small difference can make a lot of difference. Hence, one should stud? the market carefull? and invest when the price is relativel? low.

Choosing the right vendor is also ver? important. If carefull? observed then the price variations with wholesalers, retailers and commercial banks can be clearl? noted. In this manner one can watch out for the purest gold available at a comparativel? low price. For a regular investor, it makes sense to invest at regular intervals. This wa? one can take advantage of the market volatilit?. Investing in both gold and silver makes sense for a regular investor as he can diversif? and can have a stead? return irrespective of market fluctuations.

Different forms of investing in gold and silver

Other than dealing with shares and certificates, there are a number of wa?s in which one can invest in gold or silver. A few have been listed here:

* Bar: One of the most traditional wa?s, dealing with bars is ver? simple too.

* Coins: This sort of investment depends on the weight of the gold or silver coins.

* Accounts: Swiss banks provide a Gold-account option which aids in transactions involving the precious metal.

* Gold Exchange Trade Funds: This method helps gold transactions through the stock exchange.

* Spread betting: This involves predicting the rise and fall in the price of gold or silver before investing in it.

* Investing with mining companies: This is just like investing in the stock exchange. The onl? difference is that here one deals with shares from mining companies.

When is the right time to sell gold or silver?

With the current financial slump, people are selling their gold and silver as a means to make some extra cash. With the price of the two precious metals having reached an all-time high, it would probabl? be wise to hold on to it and see how far the prices soar and then cash in at the opportune moment.

There are two factors that govern the decision of the timing of a transaction involving gold or silver, the value of the US Dollar at that moment and the investor?s financial situation.

Usuall?, the price of gold is inversel? proportional to that of the US dollar. However, most investors don?t have pure gold l?ing around in large quantities. So unless ?ou are investing or speculating on a reall? large amount of gold or silver, the drop in the US Dollar?s value will not matter.

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Source: http://mychinaviews.com/2011/10/should-you-invest-in-gold-or-silver/

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