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Why Do People Buy Gold

Why Do People Buy Gold?

Table of Contents

“Gold” has held great value and importance when it comes to the monetary gains from centuries ago, and as we can see from the investment trend for gold, it still holds true. But the question of why do people buy gold and whether it is a worthy investment as people claim it to be is food for thought. I encourage such questions because it is good to research whether investing in such an asset is the right choice for you. 

Typically people invest in gold because of the money value, but it’s much more than that. Investors of all scales and even central banks hoard gold, so there must be a strong reason why gold has been and will always be considered valuable. In this article, we’ll dive deeper into is buying gold is a good investment and the reasons to buy gold in detail.

History of Gold

Gold has been a treasured article, and it has been a prized possession for centuries. It has held an important place in history and has played a massive role in civilization. Gold was a preferred jewelry option for the Egyptian, Incas, and Sumerians royalties in 2600-2500 BC, and gold jewelry for the Ancient Greeks and Bulgarians dates back to 4,600 BC. 

As recorded in history, gold had an important role in the monetary system, from being used as currency, jewelry, statutes, and for different forms of tenets. With the introduction of paper money, precious metals were used less and less as currency, and by 1933, paper money had taken over as the primary exchange means. 

Likewise to the past centuries, gold is still valued financially for its rarity and prolonged value. Though we don’t use it as a currency today, it does impact the US dollar. They have a multifaceted and complex relationship where economic, geopolitical, and investor trends impact the currency markets. 

5 Reasons to Buy Gold

Gold has maintained its value throughout the ages, unlike other assets, which is why it is the metal investors rely on for uncertain times. More and more investors are adding gold holdings to secure their wealth and pass it down to future generations. If you’re contemplating is buying gold is a good investment, below are the 5 practical reasons to buy gold:

Inflation Hedge

Throughout the century, gold has been an inflation hedge as the price of gold increases with the cost of living. During the time of inflation, the stock market’s price plunged to extremely low, yet gold prices skyrocketed, making it the most valuable commodity. The store of value of gold is why people put money into gold to protect themselves when an economic crisis hits. 

Diversification

Adding gold to your portfolio minimizes portfolio risk and volatility because it has a low correlation to other asset classes. This means that the price movement of gold is not correlated with the price fluctuation of other assets. So when assets such as stocks or bonds are declining in value, the value of gold is retained or even increases. 

Geopolitical Tension

Gold is touted as a crisis commodity for its price rises even during geopolitical instability. It is touted as a crisis commodity because of the safety it provides people when their confidence in the government is taking a beating.

Increase in Demand

Gold holds significant importance in different parts of the world as it is multipurpose such as for jewelry, industrial use, collectibles, savings, and so on, so there is a steadfast demand for gold worldwide. Gold has become an in-demand asset for investors regarding physical metal and EFTs. 

High Liquidity 

Compared to other investment classes, gold has high liquidity. The demand for gold in every form, whether bullion bars, coins, grains, or anything else, is at an all-time high, and you’ll be able to sell your gold quickly in times of need. You can conveniently sell your gold to bullion dealers at a fair price. Thus, you can easily convert your gold into cash without much hassle. 

In addition to the liquid asset aspects of gold, gold’s bid-ask spread is narrower than any other precious metal, such as palladium, diamond, or rhodium, making it a high-yielding investment. 

Investment Vehicles

Investing in gold is a reliable and safe way to make money and get the best returns. By investing in a substantial amount of gold, you can secure profit in the long term if you’re confident with your investment method. There is various method you can invest in gold which is:

Physical Gold

Physical gold, also referred to as bullion, is the true essence of investing in gold because you’re the owner of actual gold products. Gold bars, coins, grains, and jewelry articles are some prevalent types of ways you can invest in physical gold. You can purchase physical gold from a physical or online gold dealer and store them safely. 

Exchange-traded Funds 

Putting your money on gold exchange-traded funds is investing in gold mutual funds where you own different gold-related assets, such as gold mining companies. You must know that you do not own the physical gold or individual stocks. EFTs are high in liquidity and an excellent way to diversify your assets. 

Gold Mining Stocks 

If investing in physical gold or EFTs doesn’t go with your investment goals, you can invest in gold mining companies by purchasing their shares. With gold mining stocks, the profits you generate are determined by the performance of the company and the market price of gold. 

Risks of Investing in Gold

While gold has numerous reasons to purchase it, there are also some notable risks one should know before investing in gold. 

Possibility of Long-Term Performance Lag

Gold has always outshined other assets regarding return on investment, but you can only sometimes rely on this trend and blindly invest in gold. If you’re looking to secure your investment for your retirement days and invest vast amounts in gold, if the gold stocks fall, it will limit your long-term gains. 

Herd Instinct

People tend to follow the herd instinct when investing in assets such as gold. They see that investors are purchasing gold because of the returns it offers and blindly investing in gold without analyzing and judging. It’s never right to be lured by popular investment choices and jump into doing what successful investors do without assessing your financial situation.

Unfamiliarity With The Asset Class

Investing in precious metals such as gold, silver, and everything in between, if you lack the knowledge of how such asset classes work and their rules and regulations, you’ll be disoriented in the initial period of your investment. Investing in gold just thinking about the gains before understanding the legalities and the market impact will cause you a hard time when it comes to dealing with the risks, cash flow, and tax requirements. 

Future Outlook

No one can make a solid prediction as to what the value of gold will be, whether it’ll rise or fall. According to financial experts, the value of gold winds up on the bullish side. The dollar’s strength and interest rates are key aspects affecting the value of gold for the coming year. While there is no guarantee of what the future holds for gold in terms of its market value, gold’s long-term stability and value to investors, even during unstable times, is why it’s deemed a safe haven. 

Bottom Line 

Gold has been considered a worthwhile investment for thousands of years ago owing to its rich history and security blanket for investors in dire times. Investing in gold is best for people looking to diversify their portfolios and balance the risk of down-moving stocks during inflation. 

Like any investment, you should evaluate the pros and cons of buying gold and even seek financial consultation before investing. You should always purchase your gold with a reputable and ethical gold dealer; for that, you can always count on Bullion Trading LLC. 

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Isaac Kahan

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Terms & Conditions

Trading in gold and other precious metals is risky because the market is volatile. Past performance is not indicative of future returns. This is why we encourage you to read Our Terms and Conditions carefully before making purchases, selling, or placing orders with BULLIONTRADING LLC. Refer to Safety Tips from the CFTC (Commodity Future Trading Commission). These terms and conditions apply to all orders, all purchases, and all sales made through our website, telephone, or other channels.

In the event you do not fully understand the terms of this agreement, BULLIONTRADING LLC strongly encourages you to consult with your own experts. BULLION TRADING enters into transactions with customers on the reliance and belief that clients are aware of, understand, and agree to these terms.

These terms and conditions are effective as of March 11, 2022, and are binding to all new and existing customers and users.

PURCHASES, SALES, AND ORDERS

The prices for gold, silver, platinum and palladium coins and bars keep on fluctuating because of the risk factors that cause price volatility. The risk factors include political development, war, pandemics, demand, and supply. It is important to keep this in mind when transacting with BULLIONTRADING LLC.

The Ordering Process

BULLIONTRADING LLC. Does Not speculate on the prices of precious metals. This means that we don’t make profits by buying gold when the prices are low and selling when prices go up. BULLIONTRADING LLC generates revenue through premium spreads. This is the difference between what Bullion Trading LLC pays & sells these items for.

Orders and inquiries can be made through our website, phone, or other suitable channels. Contact Us for information.

Inquiries

Inquiries are made by customers who are not ready to transact immediately. Customers can contact us or go online at Bulliontradingllc.com to get current market prices. The price quote and quantity available are subject to change. They can also contact us for guidance on buying and selling bullion coins and bars. You should note that the Price Quotations you receive when inquiring are Estimates because the prices of bullion coins and bars fluctuate daily, and the number of our stock changes all the time.

For example, The U.S Mint sets premium and minimum prices for American Eagles. Prices for American Eagles are determined by the current price of gold, silver, platinum, or palladium. The mint also charges a modest premium to cater to the cost of distribution and marketing. Consequently, the price of bullion coins and bars changes daily as the markets for gold, silver, platinum, and palladium fluctuates. Refer to the United States Mint’s Charges for Authorized Dealers.

ORDERS

Orders are made when customers are ready to transact immediately. The prices you get when ordering bullion coins and bars from us are an accurate reflection of the current market prices. Note that once you place an order, the prices are locked and are no longer subject to market conditions.

An order is placed when you finalized negotiations with our agents and an invoice is generated, not when the payment is made. Ordering and then bailing out or canceling after an invoice is generated makes BULLIONTRADING LLC incur losses. We incur losses because when you place an order, we consider the bullion coin or bar sold and will have hedged ourselves accordingly.

Disclaimer: To protect our company from losses, BULLIONTRADING LLC has implemented a Market Loss Policy.

Market Loss Policy Explained

An order starts when you finalize the deal with our agents, not when the payment is made. We generate an invoice immediately the deal is sealed either through our website or phone. We also count the bullion coin or bar as sold and will have hedged ourselves accordingly.

Customers who place orders, have invoices generated, and then cancel thereafter make us incur losses. To protect ourselves we have implemented a market loss policy. This means that you will incur penalties for ordering, having an invoice generated, and then bailing out. Once an order is placed, prices are locked and not subject to market conditions.

The moment you place an order an invoice is generated. If you cancel, and then gold prices decline you make us incur a loss. It is your responsibility to offset this loss if your order is canceled and your funds are returned. If this happens you will pay for the loss caused by a decline in the price of gold after a sale is made plus a cancellation fee of $35.00. This is our market loss policy.

To remain transparent and protect ourselves from risk we might require credit card information from every customer even if payment will be received through a different channel. We also will ask for immediate confirmation of the amount locked in. This gives us an avenue to compensate ourselves for losses in the event a customer places an order and then fails to pay.

However, if the price of bullion coins and bars stays the same, we usually don’t enforce our market loss policy because we don’t incur losses. If the price goes down we charge a market loss fee which is equal to the amount BULLIONTRADING LLC would have lost because of the unpaid order.

PAYMENTS

Bullion Trading LLC only accepts payments in the form of bank transfers, certified checks or personal checks. The method you use to pay us is determined by the number of bullion coins and bars you are willing to buy from us as follows:

  • Orders ranging from $1,000 to $5,500 should be paid via any option listed above and must be received within 2 business days from the time the order was made.
  • Orders ranging from $5,500.01 to $10,000 should be paid by bank wire, certified check, cashier’s check, money orders, or personal check, and must be received within 2 business days from the time the order was made.
  • Orders ranging from $10,000.01 to $25,000 should be paid by bank wire, certified check, and must be received within 2 business days from the time the order was placed.
  • Over $25,000.01 should be paid by bank wire and must be received within 1 business day from the time the order was placed.

If Using A Credit Card You Are Agreeing To The Following Terms:

  • I understand and agree that should I dispute the credit card charge through my credit card provider, I will have breached the contract as well as committed a credit card fraud.
  • I waive any charge-back rights. In the event of a dispute, and I request for a refund it must be made through the Bullion Trading LLC Arbitration Procedure described herein under Bullion Trading LLC.
  • Dispute resolution: I understand that all sales are final. There are NO EXCHANGES or REFUNDS.
  • I cannot receive a refund from Bullion Trading LLC, nor can I request the funds from my credit card company.
  • I also agree to waive any charge-back rights in the event of a dispute.

CONSENT

You agree that you have sufficient experience and knowledge to make informed decisions to purchase from and/or sell to BULLION TRADING LLC. You openly acknowledge that you are making all of your decisions in connection with purchases and/or sales. BULLION TRADING LLC is not making any decision on your behalf concerning purchases and sales.

You also openly acknowledge that you are subject to a variety of risks that are beyond the control of BULLION TRADING LLC. You openly acknowledge that BULLION TRADING LLC is not liable or responsible for the risks you incur while trading with us. Those risks include, without limitation, risks associated with the price volatility of bullion coins and bars. Market conditions or other disruptions such as technical problems may make it impossible for you to liquidate bullion coins and bars bought from us. You have the freedom to liquid the coins and bars at market prices acceptable to you.

RISKS

All investments involve risk – bullion coins and bars are no exception. The value of bullion coins (e.g., American Eagles or Maple Leafs) is affected by many economic factors. The current market price of bullion coins and bars is determined by perceived scarcity and other factors. Some of these factors include quality, current demand, and general market sentiment.

The price of bullion coins and bars keeps on fluctuating and this means that they are not a suitable investment for everyone. Since all investments, including bullion coins and bars, can decline in value, you should make an informed decision. It is a good idea to have adequate cash reserves and disposable income before investing in bullion coins and bars.

INDEMNIFICATION

You shall indemnify and absolve BULLION TRADING LLC and its affiliates, directors, officers, and shareholders collectively. You agree to compensate the indemnified parties for and against any costs, damages, expenses, liabilities, and obligations. They include without limitation to reasonable attorney fees that the Indemnified Parties may incur as a result of, or in connection with:

(a) Any breach of any representation or warranty made by you to BULLION TRADING LLC or,

(b) Failure to comply with these terms and conditions or the policies adopted by BULLION TRADING LLC.

LIMITATION OF LIABILITY

You acknowledge that you are subject to the limitations of liability contained in these terms and conditions, the disclaimer, and other policies adopted by BULLION TRADING LLC.

If you suffer indirect, punitive, or speculative damages BULLION TRADING LLC is not liable to you. Any transaction between us and you pursuant to these terms and conditions, and any liability of BULLION TRADING LLC to you shall be limited to:

(a) The amount, if any, that you paid in such transaction or,

(b) $100 compensation. We are not, in any event, liable for any indirect, punitive, or speculative damages.

PRIVACY POLICY

BULLION TRADING LLC has adopted a Privacy Policy that is included in these terms and conditions. Our privacy policy protects your identity and credit card information.

BULLION TRADING LLC privacy policies are found in the Disclaimer, Ordering Policy, and the protection of credit card information. These terms and conditions may be updated from time to time depending on the market forces and the legal landscape.

DEFAULT RIGHTS AND REMEDIES

Upon any failure by you to comply with your obligations to BULLION TRADING LLC, the company shall pursue the rights and the remedies available to us. Either by law, through equity, or otherwise. It includes without limitation rights and remedies under these terms and conditions.

Breaching our rights may make BULLION TRADING LLC turn your account over to a collection agency, or a lawyer for collection. BULLION TRADING LLC will not fail in exercising any rights or pursuing any remedies in the case we suffer losses or damages.

Note: Failure by you to comply with these terms and conditions, may make BULLION TRADING LLC charge the credit card on which you have provided. This includes without limitation any and all market losses incurred by BULLION TRADING LLC, including cancellation fees, for ordering and then canceling at the last minute. You openly authorize BULLION TRADING LLC to charge your credit card for all losses caused by you violating our ordering policy.

RELATIONSHIPS

BULLION TRADING LLC is an authorized dealer and a professional organization. We maintain a professional relationship with all our clients. We don’t enter into relationships such as agent-principal relationships, employee-employer relationships, franchisee-franchisor relationships, joint venture relationships, and partnership relationships with our clients.

ANNULMENT

You cannot forfeit these terms and conditions, your rights, or your obligations as they apply without the prior written consent from BULLION TRADING LLC. You may be granted permission to forfeit your rights or it may be withheld by BULLION TRADING LLC at its sole discretion. These terms and conditions shall be binding to all parties that trade with BULLION TRADING LLC.

COSTS AND EXPENSES FOR COLLECTION

If you violate these terms and conditions BULLION TRADING LLC will take action against you. It may include without limitation, turning your account over to a collection agency, or a lawyer for collection. You shall pay all of the costs and the expenses incurred by BULLION TRADING LLC, including without limitation to reasonable attorney’s fees.

DISPUTE RESOLUTION

BULLION TRADING LLC maintains professional relationships with clients. This is why we make sure that any grievances are resolved expeditiously. We agree that all disagreements and disputes with our clients should be resolved in accordance with the provisions below.

Because we value the relationship with our clients, we opt for arbitration or mediation as a channel for dispute resolution instead of going straight to state/federal courts. However, if arbitration or mediation fails, we may be forced to take legal action in state/federal courts in the State of New York.

GOVERNING LAW

These terms and conditions are governed by and interpreted in accordance with the laws of the State of New York. These terms and conditions do not take into consideration the possible violation of laws in other jurisdictions.

WAIVER OF JURY TRIAL: ARBITRATION

BOTH BULLION TRADING LLC AND YOU HEREBY WAIVE THEIR RIGHT TO TRIAL BY JURY IN CONNECTION WITH ANY DISAGREEMENT OR DISPUTE RESULTING FROM, OR IN CONNECTION WITH THESE TERMS AND CONDITIONS; OR THE TRANSACTIONS UNDER THESE TERMS AND CONDITIONS. Both BULLION TRADING LLC and you also waive any arbitration requirements to which they might be subject.

FORCE MAJEURE

If BULLION TRADING LLC cannot perform any obligation hereunder as a result of any event that is beyond its control, the company shall be excused and shall not be liable for any damages as a result of, or in connection with, such delays, or such failures.

FURTHER ASSURANCES

You shall sign and avail other documents, or take actions that assist BULLION TRADING LLC in enforcing the provisions of these terms and conditions.

NOTICES

Except as provided in these terms and conditions, all notices, and other communications to BULLION TRADING LLC shall be directed to it at 20 West 47th Street Lower Level #24, New York, NY 10036. All notices and other communications to you shall be sent by BULLION TRADING LLC, to the address that you provided to us at the time of your registration, or to the email address that you provided to us at the time of your registration.

RECORDING OF PHONE CONVERSATIONS

BULLION TRADING LLC may record phone conversations between you and company agents or representatives. You consent to the recording of such phone conversations.

ABSENCE OF WAIVERS

A decision or a failure by BULLION TRADING LLC to take action with respect to any non-compliance with these terms and conditions does not affect the ability of the company to enforce the terms and conditions with respect to other violations. Whether the violations are similar or dissimilar in nature.