By Amanda Kay
Gold has long been known as a safe haven; something that many investors turn towards during tough political and economic times.
Historically, the yellow metal has, and continues to be, widely used in art and jewelry and more recently, technology. Not only that, there are a number of ways to invest in gold: through coins and bars, exchange-traded funds (ETFs) and, of course mining stocks and futures and options.
Gold investing is no doubt a solid long-term investment, so investors new to the sector will be curious to know facts about the yellow metal before jumping into the sector. While there are so many different facts about gold, here’s a look at five of them.
1. Facts about gold: It is the only metal that’s yellow
While other metals may develop a yellowish hue or colour, that typically only happens after it has reacted with other chemicals. Gold is the only naturally yellow metal out of them all.
That being said, gold is yellow in part because it absorbs blue light more than other visible wavelengths of light. A substance absorbing blue light will reflect the rest of the spectrum.
Gold is also on the last row of the periodic table with an atomic number of 79. With 79 protons in gold’s nucleus, the electrons of the atom are therefore subjected to a powerful electrostatic attraction.
2. Facts about gold: Gold investing comes in different forms
As briefly touched on above, there are many different options new investors have when they are looking to invest in the yellow metal. In some parts of the world, buying gold in the form of jewelry remains the most traditional way, particularly in India.
For the most part, some say that buying gold jewelry is done so for sentimental value and is considered “decorative artwork,” which Buyers Cash says demands a higher price than simply the value of the yellow metal.
However, should investors choose gold jewelry as an investment option, it is important to keep in mind karat amounts and its relation to price.
That being said, gold investing can be done in a number of other ways, including:
- Bars and coins: whether they’re coins, collectors coins, or gold bullion bars. They can be stored at a financial institution or personally.
- ETFs: gold ETFs are exchange-traded funds intended to track the physical gold price, and can come in the form of paper. According to Gold.org, one gold ETF represents one gram of gold, and can be bought and traded at the stock exchange.
- Gold mining stocks: when investing in gold mining companies it’s important to know the risks involved and investors should be aware of due to how volatile the market can be. Additionally, gold mining stocks in particular can have a 3-to-1 leverage on the gold price.
- Gold futures: a future is an agreement to trade gold at an already-decided amount or price with a settlement day in the future. What this means is that the investor doesn’t have to pay for the gold at the time the agreement is made, nor does the seller have to provide the investor with the gold until the agreed date.
3. Facts about gold: It is not consumed
Contrary to popular belief, gold isn’t consumed like many other commodities: it isn’t eaten, or burned–like gas and coal–and only approximately 12 percent is consumed by industry.
For example, gold is used in electronics, computers, the medical field, including dentistry, and in the aerospace sector to lubricate mechanical pieces. The remaining 88 percent is used in jewelry and for investment purposes (for things like gold coins, bars, etc).
Unlike gas and coal–as mentioned above–or even copper, almost all of the gold that has been produced over time still exists, and is held by institutions or by people.
4. Facts about gold: It is the most malleable metal
Malleability can be defined as how easily a metal can be hammered or pressed out of its shape without breaking or cracking.
With that in mind, gold happens to be the most malleable of the metals. One ounce can be beaten into a sheet of roughly 5 meters on one side. With that sheet of gold, it can be struck enough times to become so thin it’s transparent.
Not only that, but the yellow metal can be rolled, twisted and squeezed into a variety of shapes all while remaining in tact. This makes gold a soft metal, ranging between a two or a three out of 10 on the hardness scale.
5. Facts about gold: It can be viewed as a currency
Last but certainly not least, gold has currency-like tendencies. BMG Bullion notes that gold retains its purchasing power yearly.
While gold works as a currency, many don’t see it as one: you couldn’t exactly use it to buy a coffee these days. But similar to other currencies it has a price that fluctuates–for example as the US dollar–and typically increases as the dollar drops. Similarly, the gold price drops as the dollar moves up.
The yellow metal can be bought and stored however, as stated, it typically is not used as every day payments. Still, gold has the ability to be converted into money in a variety of currencies.
Are there any facts about gold that surprised you? Let us know in the comments.
This is an updated version of an article first published by the Investing News Network in 2016.
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Securities Disclosure: I, Amanda Kay, hold no direct investment interest in any company mentioned in this article.
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From:: Investing News Network