4 Facts Related to Gold as a Commodity

If you are looking at the gold commodity market, you will likely find a plethora of advice, tables and indexes describing how the market operates. Trading in commodities is commonly considered risky, sophisticated and complex, leading many investors to steer clear. However, you may be surprised to learn you can invest in gold using a relatively simple method, and many less-experienced investors exercise the option. Consider these simple facts about gold.

#1 Novice Investors Can Tap into Gold Markets

You do not have to have an intricate understanding of the commodities markets to invest in gold. In fact, there are simple gold bonds that allow you to profit off the commodity without risking too much in the purchase. The bonds are sold alongside other traditional bond offerings, and you can purchase these instruments directly through a standard trader or broker. Your mutual fund may even be diversified to include some gold investments. These investments do not attempt to be heavily involved in the mining, refining or trading of gold. Instead, they use the price of gold like a currency.

#2 Gold Is an Alternative to Currency

Currency markets heavily impact the value of any investment. You may have a very profitable investment, but if you made the investment in dollars, that can limit the profits if the dollar is devalued in the current marketplace. A devalued dollar can occur due to inflation or due to an unfavorable exchange rate with a foreign currency. If you are uncomfortable holding all of your investments in one currency like the dollar, you may consider foreign currency investing. You should also consider investing in gold, though, as it does not involve a variety of complicated exchanges. It is a currency in itself, and its price is universal.

#3 You Can Be a Passive Gold Investor

While you hold your gold investment, its price will fluctuate on a daily basis. Commodities traders often try to capitalize on this fluctuation. You can do the same, or you can simply ride out the minor ripples over the course of a year. This is particularly true if your goal is sustainable income growth instead of a "get rich" scheme. The price of gold, like that of most commodities, will tend to grow over time. There are bubbles and crashes in the price, but if you hold it long enough, the investment will typically pay off at least moderately. Passively investing in gold is an option.

#1 Gold Is One of Many Metal Commodities

If you like the option of purchasing gold as an investment, you do not have to stop there. It belongs to a class of precious metals most notably including silver and copper. Steel, iron ore and other metals can also be purchased as investments. These precious metals have an absolute value at all times, meaning they will always be worth some amount of money, even if that amount is rather small. These investments can provide protection in a weak economy when inflation is high. Many people do not think of commodities as a "safe" investment, but in certain markets, precious metals are a very safe bet.