Expert Answers 5 Key Questions about Gold
During the last week of February, 2017, John LaForge, the head of real asset strategy for Wells Fargo Investments, was answering questions made by investors and realized that most of the questions were about gold.
Which were the main questions and its answers?
Why is gold unique?
Unlike other assets, gold has served as a store of value and currency for over 5,000 years. To explain the value of gold, LaForge gives an interesting example: if a soda can was made of aluminum, it would cost about $0.03. If the can was made of steel, it would cost $0.01. However, if made of gold, the cost would be at least $600.
Who are the main consumers of gold?
There are 5 categories of gold buyers depending on the product: jewelry, bars and coins, exchange-traded products, technology, and central banks. The main demand comes from the two first ones.
The top 3 consumer countries are China, India and the United States. And the top gold-producing countries are China, Australia and Russia.
How does gold behave in the market?
Gold usually moves opposite to stock and bond markets as well as to the U.S. dollar, though not always. It is a good investment when stock prices fall to their lowest and as an inflation hedge, being thus an indispensable asset to add in your investment portfolio.
How does gold perform against other assets?
Gold behaves like a commodity in the market. However, even though gold prices today are about $1,250 an ounce and not $1,900 like 5-6 years ago, experts do not believe it is cheap comparing to most commodities or other precious metals.
What is the outlook of gold for 2017?
Although gold mining will be struggling throughout 2017, and might not be optimistic over the next five years, there are good news about gold stating that at some points there will be affordable prices and there are important records to be reached too.
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Tomorrow's economic stability starts with the gold bar you buy today.