The Gold Commodity as a Value Holder and an Investment Instrument

Abstract :

Gold traditionally has been used as a store of value and an inflation hedge. In addition to being a value holder, gold is also used across industries and by jewellers. The process of gold mining has its technological limitations, which in turn limits its supply while at the same time increasing its value. In the past, gold was used to back a number of currencies. The main objective of this paper is to define and describe the gold commodity, and then to analyse it from an investor‘s point of view what advanteges and risk this commodity holds. The result of the analysis is a list of factors impacting gold prices and gold buying options. In the short term, the buying of gold can bring both loss and profit to the investor, owing to the volatility of its market value. As a long-term investment, gold holds its value very well, and shows considerable resilience against the inflation. All in all, the gold commodity is more of a safeguard than an appreciating investment