Gold Buying Beginners Guide: What Should You Know Before Buying?

The first gold investors in America were the gold prospectors. They panned rivers and streams, hoping to strike it rich in places like California, Colorado, and northern Georgia. Even though this occurred in the 1840s and 50s, the practice continues to this day.

However, today’s methods are a far cry from those of loan prospectors on a wagon, riding across the Wild West. These are corporations looking for the world’s gold reserves. Meanwhile, you can invest in gold, lean into its stability, and come to understand how it is invested. Continue reading to learn the best course of action if you plan to be a gold investor.

How Did Gold Become Valuable?

Gold is as old as the sands of time, and it has been treasured for centuries by nations and peoples making jewelry, creating currency, and reveling in its luster. Because gold is difficult to mine, it has always been valuable. However, imagine for a moment how difficult it was to mine in the days before modern technology.

Its price was driven sky-high by emperors, kings, queens, and sultans who could afford to mine for gold, wear it around their necks, gild it into the crowns on their heads, and wield it as a symbol of power. As gold became an artifact of antiquity, it remained the thing upon which many people judged their wealth.

Currency Backed by Gold

The earliest paper currencies were backed by gold, and the US dollar is no exception. While most modern currencies are not backed by gold but the government that issues it, gold still has power. It has been the benchmark simply because it has historically been the most well-known of the precious metals. Even today, people know that investing in gold is safe and secure as compared to other forms of investment.

Defining the Demand for Gold

gold chart price displayed at a screen

Demand for gold has always been intense because it is something that most people crave. Couples wear it as a symbol of their love, families pass it down in the form of heirlooms, and its demand among industries that use it every day continues to hold.

Gold is popular in the jewelry industry, which accounts for about 50 percent of worldwide demand. Another 40 percent of the demand comes from investment in gold from the companies that mine it or produce it as coins, medals, gold bars, bullion, and the like.

The demand is then broken up further because, for example, someone who trades in gold coins may be trading for the coin design. People who trade in gold bars or bullion are trading in the gold content of the bar or coin.

Gold is considered the safest investment you can make. Those who choose to invest in volatile markets can turn to gold if those markets collapse. This would be similar to investors getting out of the stock market before the crash in 1929. They needed to turn to something that they knew would be profitable, and gold was there to bail them out.

Gold in Electronics

The rest of the demand for gold comes from the electronics industry. It is a fabulous conductor of electricity and is used in most modern electronics even though you cannot see it. It is also used to create heat shields, dental appliances, and much more.

Who Determines the Price of Gold?

The price of gold is determined by the market itself. Gold is worth what people are willing to pay for it, and the market tends to fluctuate in this regard. Thus, the “spot price” of gold changes, however slightly, throughout the day.

Supply and demand play a massive role in determining the price of gold because it ebbs and flows depending on what companies need. The demand from investors, however, is always high. People who want to make money and secure their investments will turn to gold, take a look at how much money they can pump into gold, and wait for the price to rise where they can sell once again.

The World Gold Council allows you to check the price of gold at any time, and you can see how much production is shifting from day to day.

Also, remember that gold prices tend to rise in trying times because investors know gold is safe. This can be confusing for someone who is not consistently following the markets or who has not invested in gold in the past.

How Much Gold is Out There?

Gold is found around the world and is a bountiful thing that can fill entire mines. However, it is difficult to mine, making it more expensive than it otherwise would be. Most estimates put the amount of gold in below-ground reserves at around 54,000 tons, while an estimated 190,000 has been mined throughout history. And so, there is still more than enough gold to go around.

Some Gold Can Be Hard to Reach

Some gold can be difficult to reach because it is not economically viable and might be in a location that is not safe to access. As a result, there is plenty of gold left over that is not in use at this time. Some people even believe that gold could be harvested from the moon or the ocean floor, but those locations are also inaccessible or economically unfeasible to reach.

How Do We Find More Gold?

We find more gold by mining, but the process involves more than just digging a mine and pulling out the deposits therein. Companies must often extract gold from other deposits, making it that much more difficult for these companies to obtain in its pure form. This is one reason is why the price of gold is so high: its value is inclusive of the immense labor that goes into getting it in the first place.

Plus, these mining companies are still looking for locations that make it worth their time and money to invest in gold mining. Mining can be dangerous and requires patience. Therefore, there is no reason to think that the price of gold is going to drop; technology simply cannot keep up with the dangers and difficulties of gold mining.

How Does Gold Hold Its Value?

gold chart present in a laptop with gold bars behind it

Gold holds its value because it is always sought after and is seen as a smart thing for people to invest in. For example, it can hold its value even in the worst of times like the financial crisis of 2007-2008. When that recession occurred, the price of the gold remained solid and actually rose 25 percent while the value of the S&P 500 fell by 36 percent. This means that gold can rise when everything else is falling.

The capital markets always give gold a boost in value when things turn south. Because of this, you have a few options to invest in gold that can be lucrative and exciting:

  • Jewelry of any kind
  • Physical gold, including bullion, gold bars, and collectible coins
  • Gold certificates
  • Futures
  • Gold mining stocks
  • Gold ETFs and mutual funds
  • Royalties

When you want to invest very little money, you can start with jewelry or collectibles. You can invest in gold bars or bullion with Oxford Gold Group or you could invest in companies that sell or mine gold. You want to be involved in as many different parts of the industry as possible.

Work With Oxford Gold Group to Invest in Gold

There is no reason to waste your time trying to invest in virtual currency when all you need to do is invest in gold. Gold is safe and secure and it has a lot of versatility that you will appreciate. Most people who want to invest think they need to be rich to invest in gold, but that is not true. You can invest in gold right now when you work with Oxford Gold Group.

You can use gold to protect your investments and your retirement plan. This is a good way to make a little extra money in the future while also ensuring that you remain secure after you stop working. We can handle 401(k)s and IRAs depending on your needs and we will explain how we can roll your retirement investments into gold or other precious metals.

For more information about investing in gold, call us at 1-833-600-GOLD (4653) or check out our contact page to reach out to the right department.

You can also request our e-book on precious metals to learn more about how these investments work.

We take privacy and security very seriously and we make sure that everyone who works with Oxford Gold Group gets the best customer service. We are happy to work with you to give you the best customer service. We are also happy to give you customer care when you have questions about these investments. Clarity is key in any investment market. By keeping your information secure, we help you rest assured that your investment records are private.

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