Gold Prices Are Increasing

Online, March 29, 2012 (Newswire.com) - The Gold prices have been on a year on year increase in the last decade. In current times of financial uncertainty, Gold has gained the status of a safe haven.

Gold trading has gained prominence because of high liquidity associated with Gold. The volatility experienced by Gold has proved to a boon to day traders. Apart from the trading and speculation of Gold, the prices of Gold are determined by the process of Gold Fixing on London Metal Exchange. Gold future contracts are quite popular and are traded on commodity exchanges, also known as Comex, around the world. Gold trades on various international Commodity exchanges like Chicago Mercantile Exchange, NYSE LIFFE, London Metal Exchange (LME).

It is well known that the traded value of Gold far exceeds the physical supply of the metal. These factors contribute to an increased volatility of Gold prices. Gold demand is also fuelled by demand from countries like China and India. Gold bars are held in reserves of various countries to back the paper currency. Gold is also considered to be a reasonable hedge against inflation. The market for Gold is highly liquid and that is one of the reasons for popularity of gold as an investment. These factors have acted in favour of gold in the last decade. It is difficult to comment if the same trend would continue.

Many countries have utilised the human fascination for Gold. Most countries released Gold coins. The US Eagle Dollar, Canadian Maple dollar, South African Kruger rand are examples of some famous gold coins. Buying these coins could be a way to gain exposure to gold. However, the price of some of the coins could most certainly depend on the rarity of the coins. The numismatic value of the gold coins may far exceed the bullion value.

There are various ways to gain exposure to Gold. The simplest way is to buy gold in physical form such as coins, bars etc. This will however require some secured storage area. People who are averse to hold gold in physical form can own gold certificates in certain countries. Buying Gold Exchange traded fund is also a popular way of gaining exposure into the precious metal. While selecting Exchange traded funds, it is best to select funds with lower expense ratio and tracking error. Some experts recommend ETFs which seek exposure backed by the physical metal. SPDR Gold Shares is the most popular gold etf. Buying gold mining stocks could be another convenient way of gaining exposure to gold. However, Gold stocks may be affected by many more factors than just the price of gold.