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Gold Value: Are ‘Low’ Prices Fooling Some Investors?

Gold Value: Gold prices globally generally continue remaining low. Oliver Temple – a leading expert in the gold bullion field – looks into whether demand for the precious metal is all as it seems.

"GoldOn the surface, gold is not performing as many analysts had predicted. All the indicators are there that demand for the precious metal should by now have increased.

There is the Greece bailout situation, the weak US dollar and recent falling sales in the Shanghai Index. Yet some investors globally are still holding back from buying gold.

The biggest buyers of gold in the world are the Chinese so it makes sense to look at this market.

 

Gold Market

The Chinese gold market has been slowing and this is probably having some impact for investors generally as they wait to see what happens there.

It is worth remembering that the market for the commodity is still fairly young. Until 2002, owning gold investment products was illegal in China.

The Shanghai Index has performed poorly recently and it could be that investors in the country do not physically have the money to buy gold.

However, this masks how the yellow metal has really performed. Gold is a commodity and is different from others. It is not only bought just in its own right as an investment asset.

 

Economical Factors

The precious metal’s performance is driven by a number of other economical factors. Nanotechnology, which gold is often used in, has contributed to increased demand for the metal. Gold can also be found in many engineering, medicine and environmental management applications. All markets with different drivers.

The Chinese culture means that gold jewellery continues remaining popular. In the first quarter of 2015 – according to the World Gold Council – demand in this sector was the fourth best quarter on record.

China acquired 213.2 tonnes of gold jewellery – far more than India consumers who bought 150.8 tonnes. Weddings and the Chinese New Year are key times when demand for gold increases anyway.

The power of pricing gold contracts may increase in the next few years between Shanghai and Hong Kong through the landmark stock connect scheme. Potentially, it could mean that investors move gold away from Western hands such as the London Bullion Market. This may have some bearing on gold investments in China and throughout the world.

Current gold prices should not only be judged on the performance of bars or coins. Now could be a good time – with the low gold value – for wise investors to buy gold and potentially before investors – influenced by gold prices globally – push demand for the precious metal up.

You can keep an eye on the gold value by signing up for our free gold price alerts.

 


10 Tips On How To Choose The Right Gold Bullion Dealer For You

We are concerned by the number of gold bullion dealers who appear and disappear it seems on a daily basis.

It can be hard to know who to trust when considering investing. Large dealers may not always be the best solution nor ‘one man’ bands. They may not provide that extra ‘value’.

We share 10 simple tips on how to choose the right gold bullion dealer for your family investments here.

 

Image courtesy of Chaiwat at FreeDigitalPhotos.net