Gold has been a source of wealth for thousands of years. Gold prices and value are driven by supply and demand and in the case of gold, are driven by the hording, storage and disposal of this precious metal. Annual mine production of gold over the past ten years has been close to 2,500 tonnes with about 3,000 tonnes being used for the production of jewelry and another 500 tones for retail investors. This means there is an annual shortage of about 1,000 tons of gold and that's why gold prices have sharply raised. Gold was priced at $272.00 per ounce in 2000, $513.00 in 2005 and is currently running at $1,002.00 in 2008.
This means gold is a very solid investment. The average investor knows gold is a good investment based on its growth patterns. Regardless of the form of gold that you invest in, there are several reasons why gold is a good investment. First, the S&P 500 Dividend Index from October 2006 to the last report in July 2008 showed a decrease of 4.78 percent while gold increased by 50 percent during the same time frame. The second reason why gold is a solid investment is paper money is not real money and its only value is based on the backing of the government. With the constant wars and world instability, the value of paper money is constantly changing in value. Gold on the other hand is independent of government changes and maintains its strength regardless of the world situation. In fact, gold is normally priced higher the more the world is at war.
Gold is an independent source of wealth that is outside most world market price fluctuations. It has held its value and even increased as the world money markets have crashed. Investing in gold is a smart way to protect your wealth.
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