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Four Factors Affecting Gold

By September 25, 2020 No Comments

While gold has risen in 2020, gold coin investment sales have been higher than ever.

With the Coronavirus impacting almost aspect of life, we have seen so much volatility in the stock market.  The only constant that has been rising is the price of gold.  Financial experts have acknowledged that the short term of investing in gold is lucrative which will lead to long-term profitability.  Buying gold as an investment is the best possible option for all investors to secure a long term profit as opposed to a quick turn around.

Every year, tons and tons of gold are mined. In most cases, gold is mined for retail purposes to make jewelry.  The remainder of gold that is not used is purchased by the Central Banks to be minted into gold coins and other various bullion options.  The supply and demand for the price of gold is the main influence when mining for gold.  Since gold is becoming more scarce and the government is pumping more money into the economy – the price of gold is rising due to the fact that it is not traditionally supporting the economy as it once was.

The following are 4 determining factors of the price of gold:

1. The U.S. Dollar’s Value

The worth of gold is priced in U.S. dollar currency, which helps ensure that the price of gold remains low.  When the value of the U.S. dollar weakens, the price of gold increases. And vice versa – when the U.S. dollar is strong, the price of gold weakens.

2. The Central Banks

Every countries central bank monitors the following: money supplies, interest rates, inflation rates, monetary policy, and currency.  Every country has always tied its policy and procedures to gold.  The U.S. alone has the largest gold reserve and has had most of the currency backed by gold in the past.

The reason why countries still invest in gold and buy it is that it acts as a hedge against inflation.  Having physical gold in a country’s reserve also strengthens a nation’s currency value as it will have something tangible that is tied to their currency.

  1. Inflation

The power of gold is without a doubt stronger when it is being compared to the weakening dollar.  All investors in any country have resorted to buying gold because of inflation rates and what gold has been proven to be in the past.  Gold is the most effective hedge against inflation.  Financial analysts have noticed that inflation is the biggest indicator to investors that will allow the prediction of gold. 

  1.     Commercial & Industrial Purposes

The global consumption of gold is astronomical.  China and India have some of the largest gold jewelry markets as the demand by consumers grow year over year.  When the demand for gold decreases, so does the value of gold.  Gold has also been used to help aid in construction for electrical properties.  The medical arena is familiar with gold as well as it helps prevent bacteria in certain devices.

Investing in gold has become a solution that not just some investors have thought about, but all investors alike.  The way that gold has increased in value has spurred a movement in investing in precious metals.  Despite the global pandemic, gold has seen some historic numbers this year that it has never seen before.  The time to invest in gold is now and Allegiance Gold can help you achieve financial security in your investment.  Whether it be a direct purchase in gold, a rollover into a gold IRA, or buying gold coins – Allegiance Gold will make sure you are comfortable in investing in your future.

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