The Fluctuating Gold Price Per Ounce

The topic of the gold price per ounce has become popular in different circles.

It is a political topic for the entire world, an economic topic for each nation and a social topic for many individuals.

As the gold price per ounce has always risen over time, and given the yellow metal’s ability to hedge  and therefore protect an investment portfolio. the major focus of many investors is gold as an investment asset.

A Brief History of the Gold Price

For thousands of years, gold has either been used as currency directly or it has backed the value of a paper currency.

What people today think of as money used to be known as bank notes. When bank notes first came into existence centuries ago, they were only meant to represent a quantity of gold stored somewhere else. During those times the value of gold remained stable.

Since 1971, the United States has been managing its own money supply without reference to gold. The separation between gold and the US dollar had an unusual effect on the value of this precious metal.

Gold is still valued in US dollars. Furthermore, gold exists in a relatively stable quantity to which global mining operations add a small amount every year. The supply of the US dollar, however, has continued to grow since the 1970s.

The inflation scares of the 1970s had a fantastic effect on the value of gold, which was worth just $35 per ounce in 1971. By late 1980, the gold price per ounce was over $600. The price eventually fell back down to less than $300 but held its significant gains until two decades later, when prices began to rise again.

Between 2001 and 2011, the gold price per ounce shot from $270 to more than $1,900. During that time, gold was essentially the hottest investment on the market.

Gold Investing Today

Gold was an easy pick for that decade between 2001 and 2011. Things then became a little unsettled. The gold price fell back to $1,300 for a while and upset many investors who got into the gold market late.

However, most proponents of gold investing will point out how this is just another repeat of a cycle which gold has experienced since the separation between it and the US dollar. Eventually, the gold price per ounce always goes up. In 2020 the price reached new highs and so far in 2022 and 2023 it has settled into a range between $1700 and $2000 per ounce.

How to Invest in Gold

If you want to invest in gold, there are several ways to go about it.

Investing In Gold Stocks

Many people prefer to stick with something familiar and treat gold like a stock investment. In that case, they choose stocks from gold mining companies for their portfolio or they choose gold index funds, which track the gold price in various ways.

Investing in ETFs

An increasing number of people are choosing to invest in gold exchange-traded funds. These financial instruments are much like index funds but with fewer restrictions. You can buy or sell them at any time. They provide gold investors with a way to invest in gold without having to buy actual quantities of gold.

Investing In Physical Gold

Then there are those who prefer to buy physical gold. They purchase gold coins or gold bars from a variety of vendors. Some examples of assets in this class include the American Gold Eagle and Johnson Matthey gold bars.

The former is a gold coin minted by the US government in sizes ranging from one-quarter ounce to a full troy ounce.

The latter is a gold bar issued by a precious metals company. They are typified by the classic two-kilogram bar but there are actually many available sizes for investors.

A lot of people prefer to buy gold in one-ounce bars because they are easier to liquidate when necessary.

Understanding Gold Vocabulary

Before purchasing any gold, you should make yourself aware of some critical vocabulary used in this sector of the market.

For instance, gold is not weighed using the regular or Avoirdupois ounce. This is the unit of measurement that you see used in labels on groceries or to weigh a person or package.

Gold is weighed using Troy ounces.  A Troy ounce weighs more than a regular ounce. The difference is a just a few grams but it only takes 12 Troy ounces to make a pound.

You should also understand the crucial difference between bid prices and ask prices.

The bid price is the highest price for which you could currently sell your gold. The ask price is the lowest price for which you could possibly buy gold. You generally sell for a little less than the bid price and buy for a little more than the ask price.

Summary

Gold is a perennial investment. Whether you think it is due for immediate gains or not, it is something solid which many investors keep in their portfolios to give themselves a measure of protection against inflation and market uncertainties.

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