Investing in Gold, 1

 
 
 

Vocabulary

haven	initially	times of uncertainty
wildly	currency	stocks (2)
bet (2)	fluctuate	commodity
client	security	flock (2)
option	precious	stock up
purity	jewelry	confident
carat	necklace	chain (2)
favor	weight	calculate
pillow	fuel (2)	private sector
ton	turmoil	to top the list
favor	bullion	attraction
broker	bar (2)	compared to
deal	bracelet	adjustment
refine	benefit	set you back
retain	long run	stage (2)
impact	steadily	take off (3)
trend	election	pretty (2)
coin	observe	significantly
ounce	tangible	available
cellar	demand	boom (2)
vault	balance	play a role
faith	possess	incorporate
melt	chaotic	estimate
fill	pile up	space (2)
trade	standby	share (2)
crisis	count on	securities
debt	take on	fluctuation
risk	portfolio

 
 
 
 
 
 
 
 
 

Video

 

 
 
 
 

Transcript

A safe haven in times of uncertainty. Compared to currencies and stocks, gold is a pretty secure investment.

Although its value rises and falls like all commodities, it doesn’t tend to fluctuate wildly.

During times of political turmoil, it’s viewed as a solid bet. That’s currently benefitting jewelers: business is booming as clients flock to stock up on the precious metal.

Zeshan Farid Rana, Frankfurt Jeweler: “Most of my customers are Asian. They buy gold jewelry: rings, bracelets, necklaces and chains.

I have European customers too. They tend to favor fourteen carat gold.

A set of gold bracelets costs upwards of €3,000. The exact price is calculated by weight.

Global demand for gold has risen significantly over the past few years, especially in the private sector.

In 2015, 124 tons were purchased in Germany alone, an increase of 22% on the year before. In India, around 850 tons were sold.

Topping the list, though, was China, where 985 tons were purchased, up by more than a fifth compared to 2014.

Gold jewelry is an attractive option for private buyers. But professional investors generally favor gold bars and bullion.

Gold Dealer: “That will be €3,380 please.”

Metals broker Degussa deals with highly refined gold with a purity of 99.9%. At present, an ounce of it will set you back around €1,100.

Compared to other investments, price adjustments for the precious metal tend to happen slowly. And brokers are confident that their commodity will rise steadily in the long run — although events on the political stage can have an impact.

Wolfgang Wrzesniok-Rossbach, Degussa Goldhandel Bullion Brokers: “Demand has increased markedly since October when it took off in the run up to the US elections.

The trend continued, initially as a result of Trump’s win. But after gold prices started to head back down, the drop in price fueled demand again.

As a general rule, informed customers begin to buy gold as soon as prices fall.

On popular investment is the Krugerrand, a South African gold coin that weighs exactly one ounce.

When it comes to bullion, the smallest available bars weigh 100 grams, which currently costs over three-and-a-half thousand Euros.

Five hundred gram bars go for around €18,000. A kilo costs twice that.

Many buyers like the idea of possessing something tangible.

Wolfgang Wrzesniok-Rossbach, Degussa Goldhandel Bullion Brokers: “Interestingly, one thing we have observed again and again is that many customers don’t actually consider the cost of the gold they’ve bought.

Instead, whether they keep it in the safe, in the cellar, or under the pillow, or in a bank vault, they describe what they own in terms of weight.

Instead of the price, they see the grams, ounces and bars of security.

Price no longer plays a role.”

Investors have been placing their faith in gold for centuries. And it retains its value even when melted, and incorporated into a new product.

Some three thousand tons of fresh gold are produced ever year.

The world’s current total stock of refined gold is estimated to weigh one hundred-eighty-six thousand (186,000) tons.

Piled up, that would fill the entire space beneath Berlin’s Brandenburg Gate.

The precious metal is an old standby in many portfolios.

In times of crisis, demand goes up, as investors trade shares in gold mines, or bet on the price rising.

Jochen Stanzl, CMC Markets: “At the moment, I’m counting on inflation rising in the United States because Donald Trump wants to take on fresh debt to finance new investment programs.

That’s likely to make inflation go up.”

By buying gold, you can help balance the risks caused by fluctuations.”

Yet another reason gold continues to be viewed as a safe investment in a chaotic world for both private and large scale investors.

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Questions

1. Many people have more faith in gold than dollars, stocks and bonds. True or false? Why is gold considered a secure investment?

2. Has the demand for gold increased, decreased or remained the same over the years?

3. Can people buy and sell gold in only one, standard form? Do different people prefer different forms of gold?

4. Is gold cheap, expensive or medium priced? Is the price of gold exact or does it fluctuate? What affects the price of gold?

5. “Many buyers like the idea of possessing something tangible.” What does this mean? Why do they feel this way? Do they think of their gold in terms of their price or weight?

6. Do all owners keep all their golds in bank or security vaults?

7. Buying and investing in gold is a recent phenomenon. Is this right or wrong?

8. What do experts think will happen in the short-term?

 
 

A. Is gold popular where you live? Do people like to buy and own gold?

B. What is the history and tradition of gold in your country?

C. Have you read and heard of stories and fairytales and watched TV shows and movies that involved gold?

D. If you and your friends had lots of money, would you buy gold? Why would or wouldn’t you buy gold?

E. What will happen in the future?