There are many reasons to purchase gold for capital funds accrual and its maintenance. Gold is the investment checked by time. Amid crisis, it can be extremely useful.
It is known that gold is nearly the oldest asset which allowed to maintain (and to increase) the capital. Gold coins were used long before Christ. We know that our grandmothers store gold jewelry despite of banks and the state, understanding that gold is checked by time and won't lose the value (in the near future).
Why gold has value we will discuss later. But regardless of the value reasons of this precious metal, gold was, it is and continues to be a reliable financial instrument.
Why should we buy gold: Main advantages
1. Maintenance of gold value over the centuries
As it was already said above, gold is the ancient instrument of capital maintenance. Since ancient times, people accumulated gold to transfer it to future generations and weren't afraid that its value will be lost. Notice that, unlike coins (not from precious metals) and paper money, gold managed to outstay the time check and to preserve not only its owners' capital, but also nerves.
2. Inflation protection
Gold is an excellent way to protect from inflation. When the purchasing power of money falls, prices of gold grow and catch up with inflation (and overtake). There are many examples in the history when, while prices in the economy increased, gold advanced this increase in prices and rescued owners from money depreciation.
3. Gold — anti-dollar
It is known that price charts of gold and dollar show the strict reverse ratio: when the price of gold grows, the dollar falls, and vice versa, that means, when the dollar weakens in the international currency market, gold rises in price. So, make a note: when the dollar falls, gold will grow.
4. Gold is the tool against political and economic instability
Gold is a main financial instrument when people are filled with dread. The last can be connected both with politics, and with economic, and even with a military situation. The sense that during crisis — economic, political, or other — gold is the main shelter of the mistrustful people looking for ways not to lose the capital (whatever it was). Gold proved that it can be trusted, unlike the governments, banks, financial institutions, etc.
5. The supply of gold falls
Since 2000 total amounts of gold mining decreased: in 2007 was output 5% less, in comparison with 2000. Therefore, the general offer of gold in the world market is reduced. From elements of the economy, we remember that, at such dynamics of the supply if demand doesn't fall after the offer, the prices will grow. Moreover, sale of gold ingots was reduced by the central banks from the beginning of the century that also reduces the supply and strengthens the effect described above.
6. Demand for gold increases
In the world market, in additives to the falling supply, demand of gold increases. The demand for gold grows in high-growth economies, for example in China and India, affecting the world market. Increase of gold demand in this country (India — the sixth part of the world population (1,15 billion), China — the fifth part of a world's population (1,3 billion)) is caused by cultural features of these countries, growth of the population and growth of the economy. Besides these two powers, the demand for gold grows in the whole world, but also it is sufficient these two described phenomena to claim that world demand for gold grows.
7. Diversification
Your investment portfolio has to be moderately diversified, i.e. Insured from the phenomena which strongly influence some concrete sphere or branch. Gold has been the excellent tool for the diversification of portfolios since it, usually, shows the backward correspondence to stock prices. Gold with stocks and bonds can make your portfolio less volatile. As a result, if your equity stake goes not so predictably high, the portion of gold in a portfolio will rescue your positions.
Where and how to buy gold
You can buy gold in several types. The most widespread type — jewelry, coins, and bullion or ingots. You can buy jewelry in any jewelry store and on the Internet. To buy an ingot, it is enough to come to the nearest large bank office; if ingots aren't sold there, just ask where you can buy the item you are interested in. Also, you can buy gold ingots and coins privately through Internet auctions.
Conclusion
There are many reasons to consider the gold purchase for the capital funds accrual and its maintenance. Remember that gold is the investment tool checked by time. Gold is a very reliable tool, but it can award you with big profit if you correctly speculate with it. Amid crisis, gold can be extremely useful.