GIG-OS ENGLISH: What are the most noteworthy advantages of purchasing gold?

What are the most noteworthy advantages of purchasing gold?

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“Foul cankering rust the hidden treasure frets, but gold that's put to use more gold begets” a great English classic once said.

Indeed, it is far better to use your gold to make money rather than leave it sitting on the shelf collecting dust – yet we must be aware of a few factors which could hamper our endeavour.

Gold is a solid mid and long-term investment. Despite the stability of gold prices some economic factors such as interest rates can become difficult obstacles on the road.

How do interest rates influence gold prices?

The first lesson is 'know thine enemy'. For investors interest rate is the profit they receive from their investment. Consequently, if interest rates are low, zero or even negative, investments will not be profitable.

During the last year, the US Federal Reserve has been announcing its intentions to increase interest rates pushing investors away from this precious metal and toward dollar and government securities.

What is the relation gold prices-interest rates?

When the economy is slowing down, Central Banks like the US Federal Reserve, can decrease interest rates to ease the economic burden of the population. During such periods investors prefer to buy gold – not just as protection against the negative economic factors which can badly impact income during these periods, but also because it is a zero-risk asset.

Between 1968 and 2009 it can be observed that the lower the interest rates, the higher gold prices grew. In 1979 the Real Bank prime loan rate, the Real Effective Federal Funds Rate, and the Secondary Market Rate ranged between 3 and -1 while gold prices reached nearly $200 per ounce.

In 1980, when all these rates were negative, gold prices reached $600 per ounce. Then the rates increased and gold prices decreased. These movements repeated over time, always retaining the rate-price correlation.

In spite of temporary ups and downs, the purchase of gold is always an advantageous financial solution. During lower price periods, gold keeps protecting your capital as – as previously mentioned – this situation is just temporary.

The customers of the Global InterGold Online Gold Shop buy physical investment-grade gold bars from top gold producers. They do not just protect their capital, but have the matchless opportunity to create a sustainable source of income with this precious metal.

Read about the opportunities to buy gold bars on the official Global InterGold Online Gold Shop website: www.globalintergold.com

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