Sprott is a respected Canadian businessman and billionaire who has invested enormous sums of his wealth in gold. Basically, it's the Canadian version of John Paulson. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions achieve financial freedom through our website, podcasts, books, newspaper columns, radio programs and premium investment services. Additionally, they provide a comprehensive Gold IRA guide to help investors make informed decisions about their investments.
You are reading a free article with opinions that may differ from The Motley Fool's premium investment services. Become a member of Motley Fool today to get instant access to recommendations from our top analysts, extensive research, investment resources and more. Learn more There are many reasons why people buy gold. Some invest in the precious metal to protect themselves against inflation, although one of the most common myths about investing in gold is that it can overcome inflation. Others buy it because of a cultural tradition or because they think gold is a safe investment.
Meanwhile, some buy it with the speculation that its price will continue to rise. No matter the reason, the main idea behind this purchase is that gold is valuable and will be even more so in the future due to the many factors that influence the price of gold. We'll explore the many motivations behind investing in gold by looking at some of the world's largest gold investors. To further illustrate how rare and valuable gold is, U.S.
UU. The Geological Survey estimates that there are still about 57,000 tons left in the ground to extract. Dig it up and melt it, and the additional bucket of gold available would only be about the height of an adult giraffe. Although there is little industrial demand for this gold, most of it goes to jewelry and investments in the form of coins and ingots, and the latter are usually in the hands of gold ETFs and the official sector, such as governments.
It contains about 5% of the world's gold. These reserves are greater than those of the next three countries with the largest gold reserves (Germany, Italy and France) combined. It has the largest cache of gold controlled by the government, the largest non-governmental holder of gold is the International Monetary Fund (IMF), which is a group of 189 countries that work together to promote monetary cooperation. The IMF currently holds 2,184 ounces of gold, placing it between Germany and Italy on a global scale.
The IMF has acquired its gold reserves in several ways. After its founding in 1944, the IMF received 25% of its initial quota replacements in the form of gold and required members to pay a quarter of all subsequent increases in gold quotas. In addition to that, member countries can pay interest and credits owed to the IMF in gold, as well as sell their gold to the organization to purchase another member's currency. While Indians usually buy gold in the form of jewelry and Germans in coins and ingots, more and more investors have chosen to invest the precious metal through an ETF, the largest of which is the SPDR Gold Trust (GLD 0.09%).
Data on the price of gold in US dollars from YCharts So, while you may not be the biggest investor in the gold market, it seems to be the best option that long-term investors can consider. The other group of gold buyers wants to take advantage of its price movement. . That ease of use is why it was once the most valuable ETF in the world, as speculators flocked to the bottom as the price of gold rose in the hope of capitalizing on that momentum.
Now, it's not even in the top 10 because gold's brilliance has diminished as its price has fallen from its peak. The decision to buy gold is often deeply personal. Many do so because they believe that it will hold its value better than that of a government-backed currency in the coming years due to inflationary fears or other concerns. Others will invest in gold because they believe it is a sign of wealth.
Then there are those who want to speculate that the price of the precious metal will rise due to any number of catalysts. Since people invest in gold for different reasons, it's first important to know why you want to buy it. If buying gold will help you sleep more soundly at night or fulfill a deep cultural or personal desire, then, of course, don't hesitate to buy it. In the meantime, if you see catalysts on the horizon that should push your price up, then a gold ETF is worth considering.
However, if you're looking for an investment that will grow your wealth over the long term, gold probably isn't the best option. Matthew DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Market-leading stocks from our award-winning team of analysts. Invest better with The Motley Fool. Get stock recommendations, portfolio guidance and more from The Motley Fool's premium services. Other countries could be catching up with the U.S.
Russia and China rank sixth and seventh respectively, but they are also some of the most aggressive buyers in recent years, according to the IMF. These countries are concerned about relying on the dollar as a reserve currency, as well as maintaining European currencies, in a possible United Kingdom,. The exit from the European Union, or Brexit, and uncertainties in other countries have caused tension. According to experts, slow economic growth around the world and slow trading in the stock markets have also contributed to the rise in gold prices.
The S&P 500 rises towards its 200-day moving average as the fear indicator decreases. Maria LaMagna covers personal finance for MarketWatch in New York. While Indians collectively own the most gold in the world, German investors have become the biggest buyers of gold in recent years. One thing investors should know about the SPDR Gold Trust is that it holds physical gold ingots, mainly stored in the London vault of HSBC Bank.
That's why many of the largest private gold investors in the East and West are against it or simply have a persistent lack of faith in other forms of currency. And then there are the collectors and private investors who collectively own an enormous sum of precious metals. For this reason, more German retail investors own gold (22%) than bonds (13% corporate and 5% government). .