Gold Investment

Factors Affecting Gold Price

In general, gold price can be affected by four key factors: demand and supply, political situation, inflation and the movement of US dollar. Changes in demand for and supply of gold naturally bring fluctuations in price of gold. Also, since gold has its own value, it has become a tool for hedge and anti-inflation. In political turmoil or inflation, the prices of gold tend to soar. At the same time, as US dollar is the currency used for international gold market price, the changes of US dollar exchange rate will also affect the price of gold.

Relationship between Economic Indicators and Gold Price

Among the several economic indicators affecting the price of gold, there are generally two categories:

One category, such as the difference between imports and exports of foreign trade deficit and the number of US weekly unemployment relief, is positively related to the price of gold. In theory, when there is an increase in foreign trade deficit or the number of applications for unemployment relief, US dollar is considered bad and gold is considered good by consumers.

The other, such as US Non-Agricultural Employment Population, Gross Domestic Product (GDP), Consumer Confidence Index, Producer and Consumer Price Index, local interest rate, oil price and housing sales, has negative correlation with gold price. When these figures rise, it generally implies that the favourable momentum of US economic development. Consumers have greater confidence in US Dollar and gold is considered bad.

Weak US Dollar

The weakness in US dollar is the main factor stimulating and supporting the price of gold. The unresolved issues including US property market downturn, the credit crisis, trade and fiscal deficits cause the dollar to weaken continued. The US Dollar Index reflecting the strength of the US dollar has fallen to a record low level. The weakness in US dollar makes the investment value of gold increased.

Inflation

As a result of the impact of weakness and measures in US dollar, the overall commodity price continues to rise and the inflation remains at high level. Thus, it increases the price of gold, which is often used to hedge inflation risks.

Bookmakers are not Likely to Exist in Gold Market

Any regional stock market may be manipulated, but the gold market is not the case. The gold market is a global investment market and the governments all over the world have a certain amount of gold reserves. There is no single consortium being able to manipulate the gold market. With a fair investing environment, investors enjoy the maximum protection.

Easy to Control

Unlike other investment products, such as stocks, gold investment does not require analysis over a number of factors including the world economy, market trends, industry prospects and company status, so as to choose the appropriate stock options. Gold is a unitary investment product, so the investment analysis factors are relatively concentrated, mainly the US Dollar, oil price, demand and supply and other factors. Gold investment is suitable for first-time investors.

Product Quality

The gold product of our company has passed rigorous tests and procedures to ensure the fineness and weight of each gold bar. All gold bars are smelted and manufactured by members of the London Bullion Market Association with the quality standard of international market.

Product Comparison

There are various gold products and existing choices of gold stocks or trading funds in Hong Kong. However, most of them are paper transactions backed by real gold and customers are not able to collect the physical commodity. Purchasing physical gold represents complete exchange of commodity. Customers can collect the physical gold.

Investment Recommendation

Customers should make a simple risk assessment on their targeted investment items. If the objective of the investment are to cope with inflation or mitigate the risk of property value fluctuation caused by unexpected internationally events, customers can consider purchasing precious metals as a reserve for their assets proportionally.