The Irresistible Appeal of Gold for Investors

"Halo Gold Bar" (CC BY-ND 2.0) by BullionVault

It’s a widely-accepted fact that, in times of political or economic uncertainty, investors look to put their money not into stocks and shares but into commodities instead. Leading the way in these is gold, a fact that’s been underlined by it hitting an all-time high value in July of this year. But, more than perhaps any other material on earth, gold has a special, almost mythical, status in the collective consciousness that may go even further in explaining exactly why it is so highly prized.

The first recorded examples of gold mining took place as long ago as 3600 BCE in Ancient Egypt and, a thousand years later, the first pieces of gold jewellery were being made in Mesopotamia. This was arguably the start of it being identified as a mineral to be treated as more valuable than most, despite being easier to mine and acquire than many others.

All that glitters

This attitude is one that has been adopted by many civilizations through time who have valued gold not just for its perceived value, but also for the fact that it’s a material that is non-reactive, portable and has a certain level of scarcity. To see that it still has a hold over the public imagination as the ultimate signifier of wealth and riches, one only has to look at many of the titles of the slots games to be found on sites like Space Casino. As well as Temple of Gold and Legend of the Golden Monkey, there is one of the most popular slots of all called Gonzo’s Quest. This may not have gold in the title but the storyline concerns the quest of the Spanish explorer Gonzo Pizzaro to find the legendary gold city of Eldorado.

From coins to bars

"Gold bullion coins" (CC BY-ND 2.0) by (Mick Baker)rooster

Speculators who aim to grow their wealth by investing in gold also have a number of ways in which to achieve this. The first is to buy the actual substance in the form of coins, bars or even jewellery. In the case of the former, this may be a particular favourite as certain coins are free from attracting capital gains tax when they are sold at a profit. The disadvantage of investing in physical gold is that it poses certain security concerns and may need to be stored in a secure bank vault or similar location.

Modern speculators

Therefore, a more favoured option is to invest in an exchange-traded commodity fund in which gold can be bought and sold in much the same way as stocks and shares, but with much greater stability in value than these can have. However, for those happy to live with the ups and downs of the market, gold shares and funds allow them to invest in companies associated with the mining, processing and selling of the mineral.

With the volume of gold reserves still to be mined estimated to be around 20% of the world’s total, it also seems like it will continue to be a good investment for the foreseeable future. So gold, far from losing its lustre, is likely to shine on for some time to come.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes