Gold is a commodity which interests lot of people and this article will try to provide you some insights on basic fundamentals of investment in Gold due to its investment potential.
Long term Investment: If you are planning to invest in gold for long term then it is a good idea to accumulate gold at regular interval. This will help you to average out cost and historically gold has provided 10-15% return on an annual basis.
Factors which impact Gold
1) Dollar: Generally dollar and gold are inversely correlated which means that if dollar is appreciating then gold will go down and vice versa.
2) Stock Market Return: If stock market is in bull mode then people tend to shift their investment from Gold and invest in market. Hence in such scenario you will see Gold going down. Similarly when market is in bear mode people tend to shift their investment to Gold and bonds which are considered safe investments.
3) Inflation: Gold is considered a good hedge against inflation. Hence in scenario where inflation is going on higher side people tend to invest in gold .
4) Interest Rate: For past 100 years Gold and Interest rate have been inversely correlated. Gold prices tend to go up when interest rate goes toward 0.
Please note that above mentioned correlation is indicative and market may behave differently based on different market forces.
Long term Investment: If you are planning to invest in gold for long term then it is a good idea to accumulate gold at regular interval. This will help you to average out cost and historically gold has provided 10-15% return on an annual basis.
Factors which impact Gold
1) Dollar: Generally dollar and gold are inversely correlated which means that if dollar is appreciating then gold will go down and vice versa.
2) Stock Market Return: If stock market is in bull mode then people tend to shift their investment from Gold and invest in market. Hence in such scenario you will see Gold going down. Similarly when market is in bear mode people tend to shift their investment to Gold and bonds which are considered safe investments.
3) Inflation: Gold is considered a good hedge against inflation. Hence in scenario where inflation is going on higher side people tend to invest in gold .
4) Interest Rate: For past 100 years Gold and Interest rate have been inversely correlated. Gold prices tend to go up when interest rate goes toward 0.
Please note that above mentioned correlation is indicative and market may behave differently based on different market forces.
