Benefits of Buying Gold Bullion

General Benefits of Owning Gold

1.    Gold Offers Protection Against Inflation -

The term inflation means that it costs more dollars today than it did yesterday.  The reason that it costs more is that the value of the dollar is worth less today than yesterday.  Converting your dollars into gold protects you from inflation by getting you money out of a dollar that will be worth less tomorrow and into gold which will hold its value.

2.  Gold Offers Protections Against Currency Fluctuations -

Much like the gold’s protection against inflation, owning gold protects gold owners from a declining dollar, otherwise known as currency risk.   By buying gold bullion gold buyers convert their dollars into gold bullion.  If the dollar declines in value, the value of gold stays the same.  The gold bullion will cost more dollars because dollars are worth less.

3.  Gold Ownership Protects Against Government Instability -

Everyone knows that America’s money is no longer back by gold.  If government instability or financial instability make the dollar worth less money, people’s savings can be wiped out.  But gold buyers are not dependent on the value of the dollar.  They can buy goods with their gold.

There are many more benefits of buying gold bullion, but I believe that the three benefits mentioned in this article are the most important reasons.  Why do you buy gold bullion?

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One of the leading experts on the world gold market price is Jim Sinclair.  Here is a great interview with Jim Sinclair on Bloomberg News regarding the world gold market price and the need for returning to the gold standard.

Here is the Jim Sinclair interview on Jim Bloomberg News.  I hope you enjoy Jim Sinclair’s opinion on the price of gold and the gold market in general.

However, in 2009, the price of gold clearly indicates that we are in a bull market.  The demand for gold bullion is at an all time high.  The United States Mint and mints around the world are having a difficult time keeping up with this demand.  As an example, the United States Mint decided to stop selling fractional gold bullion coins this year due to problems with supply of the gold bullion planchets that the coins are made from.

But, if you want to invest in gold, you need to understand historical gold market prices.  Chances are that gold will not sell above $1,000 an ounce forever.  And, if the last 40 years are to provide any indication on the future price of gold, I think that it is important to understand where the price of gold has been over this period of time.

Gold Value Chart 1971 - 2008

Gold Market Prices 1971 – 1980

In 1971, the average price of gold was $40.81 per ounce.  Can you believe that forty years ago you could buy an ounce of gold for this little of money?  It is hard to believe that gold market prices would be so low considering that the gold prices today are around $1,000 and ounce of gold.

From 1971 to 1980 the average price of gold increased from $40 an ounce to $614 an ounce.  In ten years that price of gold skyrocketed and the first gold bull market of recent memory began.  But, the price of gold tends to be a contrarian play.  During times of economic uncertainty, demand for gold increases.

Gold Market Prices 1980 – 2000

Beginning in the 1980s with the policies implemented by the Reagan Administration, the United States experiences a 20 year economic bull market.  During this 20 year economic bull market, the price of gold fell off its record highs of $614 an ounce.  It fell fast and hard.  The average price of gold in 1981 was only $459 an ounce.  In 1982, the average price of gold fell further to $375 an ounce.  Then the gold bear market was in full force with gold averaging in the mid $300s during most of the 1980s and 1990s.  In 2000, the price of gold averaged $270 an ounce.

Gold Market Prices 2000 – 2008

During this decade, gold market prices experienced another bull market beginning in 2003.  On July 20, 1999 gold market prices hit a 20 year low of $252 an ounce.  By 2003, the average price of gold was up to $363.  In 2004, gold prices rose to an average of $409 per ounce.  In 2005 average price of gold reached $444 per ounce.  This steady increase in the average price of gold has continued ever since with gold prices today hitting $1000 per ounce.

Future Gold Market Prices

Where future gold market prices will be nobody knows for sure.  However, understanding the historical gold market prices is important for you to understand the risk of investing in gold.  Too many gold investors today believe that the price of gold is stable and can’t fall.  That is not correct.  As you read above, investors in gold in the late 1970s saw huge declines in the price of gold in the early 1980s.  Am I predicting a similar gold market crash now?  No, I am not.  But, I think that it is prudent to understand the risks when investing in gold.

Hopefully this review of the gold market prices has been helpful.  I think that it is important to understand the gold market before investing.

As the stock market continues to plummet and the world economic outlook remains uncertain, investing in gold can be an attractive investment.   Owning gold bullion tends to protect investors from political instability and the price of currency on the foreign exchange markets.

Gold prices have not been this high since the last gold bull market ended in 1980.  On January 21, 1980, the price of gold hit $825.50 which in today’s inflation adjusted dollars is equal to $2,168.50.  With gold currently in the $1,000 range, it is not unfathomable that gold price could rise to over $2,000.

While no one knows where the price of gold will be in the next year, reading Gold Prices Today will give you an advantage over other gold investors.  We promise to keep you up to date on the gold price news so that you always know the gold prices today and the trends to help you predict the future price of gold.

In addition to bringing you today’s gold prices, the latest gold price news and gold market trend information, Gold Prices Today will explore the different ways to invest in gold.  We will explore how to buy gold coins, how to buy numismatic gold coins, how to invest in gold etfs, and other ways to invest in gold.

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