Business People And Gold
Whoever has the least of interest in how the world goes round nowadays
, reacts to the name of George Soros. He is after all "The Man Who Broke the Bank of England". The details of his transaction, however, remain for many obscure. Not least because he resorted to purely financial speculation methods to make his fortune. In the business world his transaction is known as "short selling". In other words he borrowed 10 billion pounds sterling, sold them on the market and hoped that the sterling would devalue. When it did Soros bought back the 10 billion at a cheaper price and had a return of $1 billion.What is even less known is the fact that the UK was going through a serious currency crisis. The pound sterling was pegged to the Deutsche Mark within the European Exchange Rate Mechanism of which the UK was a member. When the peg became no longer sustainable and the Bank of England failed to act swiftly to float the currency (let its value be determined by market forces rather than artificial financial maneuvering), the pound collapsed. In short Soros made his first $1 billion during a crisis.
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.
In fact gold was proven to be a safe investment by the current crisis itself. The World Gold Council showed that the demand for gold bullion went up five times more in the last quarter of 2008 than in the last quarter of 2007. Unhappy about low deposit returns and uncertain about the stockmarket, businessmen around the world decided to go back to the safest investment in the book: GOLD.
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