Why Should Business People Invest In Gold

Why Should Business People Invest In Gold When one hears the name of George Soros one immediately associates it with wealth. And a lot of it! Fewer people know, however, how he made his first billion of dollars. It all came down to speculating about currency. In 1992 the UK was going through a serious currency crisis which determined Soros to make a bet on the sterling going down. In financial lingo the transaction is called "short selling". Briefly he borrowed 10 billion pounds, sold them on the market, waited to get devalued and when they did, he bought the 10 billion back at a cheaper price, returned them to the owner and gained a hefty $1 billion in profit. The whole move earned him the name of "The Man Who Broke the Bank of England".

What not everybody knows is that at the time the UK was part of the European Exchange Mechanism and the pound was set at a value of DM 2.95. (the then German currency - Deutsche Mark). Once the British economic performance could no longer sustain the rate and since the Bank of England refused to let the pound float, the pound sterling collapsed. In other words it was a crisis that made Soros rich.

Hoping for a major economic downturn to occur to make you rich is not exactly the right solution. They do not come by so often, though some would like to disagree and they do not last for ever either. This is part of the reasons why business people should consider other ways of putting their money to good use. And investing in GOLD sounds and is a safe and long-term investment.

Be it jewlery, Krugerrands-gold coins from South Africa or gold bullion bars, people have always preferred buying gold over just putting money into a bank. This happens because in general, interest rates on deposits tend to be fairly small under normal economic conditions. Central Banks want the money to be spent in the economy rather than stored safely in banks so they offer low returns on deposit money. Interest rates will only be made to look appealing if the economy and hence the banking system, needs enough liquidity to trigger a hike. And this again is more likely to happen during a crisis

On the other hand there is no bigger oportunity to show the virtues of buying gold than an economic recession, such as for example the one we are experiencing. According to the World Gold Council the retail demand for bullion in the last quarter of 2008 was about 5 times higher than in the same period in 2007. Low deposit rates and insecure stockmarkets made business people around the world return to the oldest investment ever: Gold.

by: Jack Wogan.

About the Author:

Learn from professionals how to buy gold bullion bars in times of recession.

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