There are numerous reasons as to why anyone would decide on buying gold, but before you even think of buying gold, it is best that you ensure that it is the appropriate decision that goes along with the financial situation that you are in. People buy gold as gifts (even gold bullion for that matter), as a utility or an instrument of investment.
There is no doubt that it is beneficial to have a percentage of your investment portfolio in gold bullion as it would serve as a hedge against economic situations that are unfavourable. In other words, it would balance out the losses that an investor would incur when he or she loses value in other investment vehicles. This leads us to another question with regards to just how much one should invest in gold, in most case scenarios, seasoned investors place about 15 – 20 % of their total investment portfolio into gold bullion.
However, the timing of your purchase of gold bullion is also a vital factor as it is critical not to buy bullion when prices are rising. Thus, the best time to buy gold is when prices have remained relatively stable for a couple of months; this actually indicates that gold has met its ‘actual value’ or real value. However, if you have the extra funds to purchase gold, it is okay to do so as if the prices do come down, all you have to do is purchase more gold to bring the average price lower.
For instance, if you buy 10 grams of gold at 30 dollars a gram it would come up to 300 dollars, and let us just say that a week later, the prices fall to 25 dollars a gram, this would mean that you have lost 50 dollars, but if you were to buy another 10- grams of gold at the new low price of 25 dollars a gram, you now would have 20 grams of gold that you purchased for 550 dollars (300 dollars plus 250 dollars), this would mean that the price for each gram of gold that you have is now 550/20 which is equivalent to 27.50 per gram.
Therefore you have brought down the initial purchase value of gold from 30 dollars to 27.50 dollars effectively. Whatever happens, a person who is in possession of physical gold bullion can be rest assured that there will be a time that the price of gold will rise at which point in time this individual will stand to make a handsome profit. An example of this transpired in 2008/9 when the prices of gold increased by 1200 dollars per troy ounce (a troy ounce is equivalent to 31.1 grams).
The reason behind this historic increase was attributed to the fractured economy which drove investors to dump stocks, bonds and other financial instruments in favour of the shiny yellow metal.
This situation actually happens once in every decade or so and thus buying gold bullion is without a doubt a wise decision that will not go wrong. For more info visit Brisbane Gold Company.