Gold Education – Learning About the “Why” of Gold Prices
If you haven’t seen the ads and signs that say “we buy gold” lately you’ve been living under a rock. What used to be the area of expertise of pawn shop owners has now gone mainstream. Most large chain jewelry stores now buy gold as do many other local high end stores.
This is because gold has risen from $282 an ounce in January of 2010 to $1600+ an ounce in October 2011. Because of this, the buying and selling of scrap gold has become very popular. To understand this it is important to get a gold education in why the prices are the way they are.
What is Causing the Rise in Prices?
Your gold education should start with a basic understanding of what makes a commodity go up in value. In the most basic sense it has to do with supply and demand. To be more specific there are several factors that are causing gold prices to go through the roof: economy, fear, and demand among them. When the economy is shaky, as it has been in the last several years, people buy gold as a hedge against uncertainty. This happens in nearly every shaky economic climate. The uncertain economy causes fear which makes people want to invest in gold even more, because it is viewed as a real tangible asset. Demand is then fueled by both the fear and the shaky economy causing the limited supply to be valued even more.
If you further your gold education you will find that many economists believe that gold is going to increase in value, at least over the short term. However, even if gold goes down in value you can profit from it if you know what you are doing. By learning to trade gold, you can take advantage of both up and down trends in the marketplace.