Gold and Precious Metals Investment Funds
This page is designed to tell you a bit more about Gold and Precious Metal funds, along with a running commentary on how the market is looking at the moment.
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Gold Investment Funds
Factors influencing the value of Gold
Commentry on the price of Gold
Feel free to read the opinions expressed in these pages, but do remember that this commentary does not represent any financial advice; it is merely the opinion of the author, which may be completely wrong. Do not forget that the value of your investments may go down as well as up.
US Dollar Gold Price
(supplied by galmarley.com)
Gold and Precious Metal Investment Funds
These funds invest in shares in gold mines, other precious metal mines, diamond mines, and various other valuable ore companies. These shares tend to move separately to the main share market due to the unique commodities that they are invested in. When the financial markets look bad, people tend to get worried about holding onto cash investments such as dollar notes, or government bonds, and so want to move to something more ‘real' like gold and diamonds which is perceived to be more trustworthy (Diamonds are, after all, forever). Correspondingly the share prices in these sorts of companies go up or down depending on the consumer demand for the precious metal/ore, usually by a greater percentage than what ever they are selling. These sorts of funds are therefore very useful for protecting yourself against huge stock market loses. If the stock market crashes, gold and other precious metals will become very, very popular and valuable as people rush to buy them, and at least some of your stock market loss will be offset by your gains in the gold and precious metal area.
Factors influencing the value of Gold
Gold Demand Obviously the higher the demand for Gold, the higher its price. Certain nations hold the metal in high regard and often use it for major purchases or investments (by purchasing jewelry etc). China and India are very important consumers where there seems to be a emerging business population looking to invest in some physical cash assets. Gold, Platinum and Diamonds are also heavily used in industry.
Dollar Price Gold is typically quoted in Dollars, and if the dollar begins to sink then the value of Gold tends to increase and vice-versa.
Market Fear Whenever the stock markets or political situations look bad then people tend to fly towards Gold. Stock market crashes, terrorist attacks, or wars will all tend to push the value of Gold up.
Market Greed As with all investments their performance can be self perpetuating, i.e they start doing well and so more people get interested, the Gold funds start appear on the front page of the Money section in the telegraph, and the general public are advised to buy, buy, buy. This obviously has the effect of pushing gold prices, and gold mine share prices up, as everyone wants to get in on the act.
Gold Price commentry
Below is a running commentry on the gold and precious metal market (in reverse chronological order)
01/06/04 - Gold has been suffering lately due to the improved stock market position and the strengthing of the dollar. However political tensions still help to support the price of gold which is hovering around the $390 dollar mark. If it pushes through $400 due to a political disaster it may well sky rocket. Alternatively if it fails to push through the $400 dollar barrier it could well tail off to the low $300's.
01/04/04 - A recent rally in gold has been caused by nervousness about the US recovery, the increase in oil prices, and a growing tension in the political world. Gold peaked at around 425 dollars and is now giving up some of its gains as people profit take and political tensions ease off.
01/03/04 - Gold has given up some of the gains that it made in the last few months due to a round of profit taking, however gold still manages to find good support just below $400 dollars. Now could be a good time to buy gold whilst it is consolidating.
01/02/04 - The Dollar is pausing for breath at the moment and possibly is making some head way after some positive comments about 'still supporting a strong dollar' from the Bush administration. Consequently the price of Gold is beginning to suffer, but it is still finding support at the psychological level of $400.
01/01/04 - With the dollar beginning to suffer, and a general nervousness about terrorist attacks over the Christmas period the price of Gold has been steadily increasing.
01/12/03 - Gold breaks through the important psychological level of $400, pushing it to a more prominant position in the news. Hence more people are becoming interested in investing in Gold and share prices should soar over the next few months if the $400 dollar mark remains firm.
Remember that this article is for information only and is not intended to give any financial advice on gold and precious metals, or indeed any other type of investment.
Investing in Gold and Precious Metals