Investment in Gold

“No other commodity enjoys as much universal acceptability and marketability as gold” – Hans F. Sennholz, German-American economist

“Paper money eventually returns to its intrinsic value – zero” – Voltaire
Detlev Schlichter, author of Paper Money Collapse, says the system of paper money is fatally flawed. According to him the money that is created can be recreated by the privileged producers - the Central Banks. 

Paper money is entirely elastic and this forces us to move to something which cannot stretch like it such as precious metals. He advocated a free market system where the investments are not attached to nations. 
He supported gold stating something like gold can be easily exchanged at bank and this could be more attractive. 

Future of gold investments 
Gold is a physical commodity driven by supply and demand. Its value changes fast, at sometimes, the prices are too high. 
 

Change in gold price (per ounce)

Source: The Real Asset Co

World Gold Council report states 
•    Gold ETFs saw a growth in holdings in Q1.
•    The demand for gold jewellery continues to grow in India and China. 
•    Gold demand continues to grow in technology sector. It is used in electronics in gold bonding wires, chips, wireless (mobiles, security systems, gaming consoles etc.) and printed circuit board (PCB) sectors.
•    Annual volume of gold bought by investors increased 235 percent in the last three decades. Emerging market Central Banks increased official gold purchasing and European banks ceased selling gold.
•    Environmental and governance issues will hamper current mining practices and the mining industry will have to invest more to produce the same amount of gold over the next 30 years. 
 

How to own gold: Physical gold or ETFs?
The price of metals involves international spot price and purchase premium. The spot price is determined by the key markets, and is the price determined in the London Bullion Market. This price fluctuates every month and one needs to determine the amount of bullion to invest. 
 

Physical gold

Gold is available in cast bars or minted bars form and there are wide range of weights and sizes where one can invest. Physical investments by individuals involve bullions, gold coins, medals, gold bars and industrial demand. 
The only way to hold bullion is to have a legal title to the gold bars and coins with a trusted seller.
A purchase premium is charged by the seller, which is mostly a decimal or a percentage of prices. Basically, it is the extra cost of production and the shipping charge to the storage location.  
Bars and bullions can be stored in safe deposit boxes managed by professional institutions. Banks can provide safe storage boxes, where some level of government disclosure is needed to indicate the price of such assets in bank. 
Bullion banks provide storage with a yearly storage fee and most wholesale bullion dealers provide storage solutions. Some investors hold unaccounted metal accounts to store gold.
London Bullion Market is mostly a paper market which consists of gold denominated debts.    

Gold ETFs

Gold ETFs is less-complicated method to hold gold where the investors hold units of gold issued by a trust.  JPMorgan Chase and HSBC are two major custodians of gold and silver exchange traded funds. 
ETFs provide a low cost holding option.
Most metal ETFs are investment options created by banks.

Risks 

•    Investment risks involve loss of investment money due to reducing prices. 
•    One may have to pay more for the same bars due to high charges of seller. 
•    One should know the conditions of investments and invest through reliable firms to avoid scams.