So you have decided to put your money into gold. That is a good thing. There are so many products or forms of gold to choose from but if you are new to this, you may find gold bullion bars more convenient and more affordable than other forms. Gold bullion bars have lower premiums than coins because there is little that goes into the design. There are some features that you need to be aware of the next time you buy gold bullion Brisbane.
Just because they have simpler designs does not mean they are cheap are more important. Refineries that produce gold bullion bars also attach premiums to the price. There are a number of golf bullion bar producers whose brands are well-known. These brands are Perth Mint, Royal Canadian Mint and others strewn across the world sell quality bars that have higher premiums than those that are sold by private mints. The spot price of gold might be the same everywhere but premiums differ from one gold dealer to the next.
Costs of Raw Gold Production
Every year, approximately 2,500 tons of gold are produced across the world. There are manufacturing costs that apply and they tend to be affected by inflation. These costs increase labour costs, fuel costs, shipping costs storage costs, etc. These costs are passed on to gold buyers in the form of higher premiums.
Supply and Demand
Supply and demand dynamics affect the price of gold. If the demand for a particular form of gold is high than its supply in the market, its price will go up. The gold supply chain is affected by a number of things from struggling currency values, economic problems, trade wars, and technological advances. If the supply is higher than the demand then the price of gold bars is low.
The way gold is used affects the demand. According to the World Gold Council (WGC) close to 50% of the gold produced is used in the jewellery industry. Gold however is used in a lot of industrial applications. It is used in manufacturing cellphones and other electronic products. In addition to these industries, gold is used to make investment products like gold bullion bars and coins that are bought by central banks, individual investors, and other financial institutions.
There are a lot of economic analysts and experts who monitor the price of gold. These “experts” always have some opinion about the price of gold and where it is headed. Sometimes their predictions are accurate sometimes they are not. If you are going to buy gold bullion Brisbane, do some research on what experts say but take their advice with a grain of salt.
In the last five years, a lot of these experts have been predicting that gold would go up and even reach levels of $5,000 an ounce or more. Some have been saying this even before the pandemic hit in 2019. It sounds a little over-optimistic that gold prices would go that high. It is safe to note that many were reading into inflationary pressures, trade wars, and protectionist policies when Donald Trump got into office and Brexit. Gold is volatile but its up and down movements aren’t as drastic as some other investment assets, so one can say that these predictions of higher prices weren’t so bad. It was clear that the price of gold was on a high trajectory predicting the exact amount and foretelling how this would happen is an entirely different thing.
The demand for gold is not dropping, what might be hard to say with certainty is when. History has shown that gold as a long-term investment vehicle is the best. History has also shown that gold holds its value better than most assets. Whilst it might be difficult to say with certainty where the price of gold is headed, you should invest if not to make impressive returns but to protect your money against risks you don’t have any control over.