What is a Bullion Market?

Advantages of Gold Investment
2012年11月30日

1、Hedge against Inflation:

Inflation and the devaluation of current asset holdings is one of the biggest concerns for individual and institutional investors alike. As the devaluation of currency affects all asset classes, risk adverse asset classes which correlate with the weakening of a currency asset, allows bullion products to increase in value. Therefore, in an environment with rising inflation, investments in bullion are a good investment to hedge against inflation to preserve investor asset value.

 

2、Hedge against Geopolitical and Economic Instability:

Other factors such as global political or financial instability are situations which increase the demand for bullion investment. This is due to the “flight-to-safety”, which is when investors panic towards an asset class when facing financial loss.

 

3、Gold Markets are Unlikely to be Manipulated:

Financial markets are sometimes victim to monetary and financial manipulation. Due to overall liquidity of the Loco London Gold market, the possibility of market manipulation is almost impossible. Due to the market regulation of gold exchanges, such as the Chinese Gold and Silver Exchange Society (CGSE), no broker can deviate from the gold market price which does not represent the true gold value. If a broker were to adopt this deviating price strategy, a large investor will take advantage of this discrepancy which would result in a loss for the broker. Therefore gold prices will generally reflect an accurate and true representation of the current price.

 

4、Not Likely to Collapse:

The 4th great benefit of investing in gold: The stock markets and real estate run the risk of collapse. Once the markets crash, investors will lose their investments. Gold is a rare, non-renewable precious metal. At this point in time, the total gold mined is more than half of the earth's reserves. Simply put, the future of gold supply will become less and less, and as a result, there will be a steady upward trend in the price of gold. Even if there are fluctuating prices every now and then, there is still a favorable outlook for gold over the long run. In 1994, gold was priced at US$35 per ounce, now the price of gold is above US$1000. In between those times, the price rose continuously. And unlike stock and real estate, the gold market will not face any perilous situations like a market crash.

 

5、24-Hour Trading: A Market Where the Sun Never Sets:

The 5th great benefit of investing in gold: Gold is not a commodity that exclusively belongs to any particular country; rather, it is an exchange-traded product that is freely traded throughout the world. Therefore, when the gold market in one country is closed for the day, another gold market on the other side of the world is opened. The trading hours in each of the countries resemble a line linking one country to another (as shown below). Gold can therefore be traded 24 hours a day. Or put it simply, an active trading time occurs at any hour of any day. So, even when the stock market is closed, the gold investors will still be able to grab hold of an opportunity to invest and turn every minute into real profits.

 

6、Internationally Tradable:

Historically, gold has always been perceived as the best method as a means to represent an exchange goods and services. This is because gold is easily recognizable and difficult to manipulate. For international trade, all high-street banks retain some storage of gold as a means of value preservation by the government backing of fiat currency against gold. This can be referenced by Central banks and their current gold holdings, as well as the historical method of backing US dollar against gold.

 

7、No Problems of Depreciation:

The 7th great benefit of investing in gold: Almost all luxury items are depreciation-related items such as designer handbags, name brand watches, and expensive cars, and all of them start to depreciate from the minute they are bought. There is no way that depreciable items can be resold at their original price. Worse still, they depreciate quickly and badly -- especially after being actively used for some time -- such that their value could be worth less than half the original price. On the other hand, there is no depreciation for gold. Its value and popularity are everlasting. Even when a piece of gold jewelry appears less lustrous after being worn for a while, the value of the gold itself does not diminish. There is no such thing as a discounted secondhand gold in a market. And to restore a piece of gold jewelry back to its original luster, all you need to do is give it a good cleaning. Besides, it can also be melted down and made into new jewelry or into a gold bar.

 

8、Stable and Long-lasting:

While some luxury products are considered an investment, gold bullion does not generally decrease in value over time. This is because of the general inflationary effect of countries increasing their wealth over time. Another aspect that should be considered is that gold is a very stable product in terms of its metallic properties. As such, an ounce of gold today will still represent an ounce of gold within a hundred years. This timeless effect of gold is one of the inherent reasons investors choose to invest with gold bullion.

If you already have a basic understanding of investing in gold, it is recommended that you open an Acetop demo account in MetaTrader 4. Demo trading allows you to become familiarized with the Acetop trading rules and operations. Through trading under real market conditions with virtual funds, you can get more trading experiences before you start real trading with real funds.