Advantages and Disadvantages of gold

Gold a glittering metal that has been the most sought since ancient times is considered as the most precious gift material for exchanges between people. In today’s time, due to its high demand, the price of the metal has risen to a considerable height. This has resulted in an attraction of investors towards it. Though this form of investment have advantages as well as some drawbacks.

Previously investments were made by masses in the metal’s physical state i.e. in the form of jewelry, bars and coins. That was a bit costly affair for the customers as the making charges taxes were levied to the actual price of the metal. Later, when the sale and purchase of gold was introduced through stock exchanges and in the form of mutual funds people preferred it the most. Reason being its advantages to the customers like saving the cost of the storage in physical form, maintaining its security, saving of taxes and the making charges of the item stored in the form of demat or paper. One can sell and purchase the metal as per his/her requirements in an easier manner through these mediums. The flexibility of purchasing gold in small units through stock market had broadened the customer base of gold in the world. Apart from elite class, common people can also buy and sell this precious metal as per their need. The transparency involved in the pricing of trading through stock market is another added benefit.

Trading includes risks no matter in what field it is being practiced. The same risk is beard in case of gold trading. Volatility in the prices of gold creates a high risk in the rise and fall of gold selling prices. If the prices fall, the customer will be paid as per the current rates in the market thus, this incurs loss to its investor. Secondly, there are certain charges being imposed on investors by the funding houses in the form of managing funds. This results that at the time of selling the metal the actual prices offered is a bit less than that of current price of gold. There are certain other charges in the form of brokerage or commission both at the time of procurement and selling of the metal. There is no form of funding available to buy gold as compare to investment in realty market. Another risk involved is the manipulations being made by some hot shots in the market in order to subdue the pricing to boost their own earning in paper format.