More Facts To Consider Before Buying And Selling Gold

5 More Facts To Consider Before Buying And Selling Gold<br /><br />A couple of weeks ago I wrote an article called 5 Facts To Consider Before Buying Or Selling gold.<br /><br />On the 16thof April I suggested that buying 10th ounce gold coins wasnt a bad idea all in all. mint had suspended sales of 10th ounce Eagles as they had gone out of stock because of sudden demand.<br /><br />People talk about central banks buying and selling gold as if it is some kind of big deal. The question has to be asked as to why banks hold gold at all. There are many other things banks can hold to diversify their reserves and most of these instruments dont need a high security vault that can cost 1% of the value of its contents a year.<br /><br />So why do governments hold gold?<br /><br />Government holds gold because in a war, gold is what you end up paying for war materials with international trade. ended up with most of the worlds gold at the end of the Second World War.<br /><br />In war, paper promises significantly lose their attraction and gold does become money. Gold fluctuates with uncertainty, which can be a double edged sword. Although you wont read much of it, positive developments in the real world are bad news for the price of gold.<br /><br />2. Gold consumption is approximately 6,000 tonnes; gold production is 3,000, however<br /><br />Its impressive that consumption is so much higher than production, however gold isnt sugar. lost forever is hard to say.<br /><br />Apart from lost earrings and the gold in industrial and consumer consumption ending up in landfill, gold cant really be said to be consumed at all. With only 300 tonnes going to actually make stuff, the rest is going into storage, or dangling off limbs and appendages, ready to pop up for sale when the price is right.<br /><br />Remember there is $9 trillion dollars of gold knocking around. Let us say there is about an ounce of gold for every man woman and child on the planet with supply growing by 2% a year.<br /><br />If gold was money that would be way too little. However, as a supply for dentistry, electronics and bangles and some portfolio diversification, thats probably enough.<br /><br />Special Offer: Finding undervalued gems can be a tough task. Get the names of five rock solid companies with real, tangible growth drivers and big money making potential in the free report 5 Bargain Stocks To Buy Now.<br /><br />3. People are mad for gold; irrational and barbaric jibes are not an argument against gold<br /><br />People love gold. As such it can bubble. History is littered with crazy bubbles. Asset valuation bubbles are part of the landscape and golds crazy streak and atavistic attractions makes it a strong candidate for a bubble of the future.<br /><br />Dont expect to get a serious reaction to gold, but that is simply a hint that with the right set of circumstances gold can really go off the dial in price. Think of gold as something with huge and animal beta. Risk equals reward and there is little as risky as a metal that can make grown men shake.<br /><br />4. Gold is the anti dollar<br /><br />This isnt necessarily good for gold. Imagine for some unexpected reason, Japan and Europe were going to devalue their currencies against the dollar. Oh whoops! The dollar would be strong. Quite likely that would make gold weak. In the short term short gold can be the same as long dollar. That could be painful to gold holders, even in the middle of a global financial crisis.