Gold - What is the Return on Investment (ROI)?

By Tushar Mathur

Investing in gold usually means a long-term investment for five to ten years or more. Is there a right time to invest in gold? Many people ask this question, since the price keeps changing, almost on an hourly basis. In today's context, the gold price is on an upward trend and sometimes it retains the same value. Several financial analysts suggest that gold investment is a convenient, safe and value for money.

What is the root cause for the rise in value?

The price of gold is based on the value of the US dollar. The international trade is dependent on the common exchange currency. However, some analysts suggest that there is a possibility of a correction in gold prices due to profit booking.

If you deeply analyze the facts, you will find that the value of gold does not actually change very much at all. The value of gold over the past 200 years has hardly changed when compared with the value of other goods in market. If you compare one ounce of gold today, you will be able to purchase almost the same amount of goods as you could have done 50 years ago. The only change is the value of the currency and not the gold. Inflation, recession, all affect the value of the fiscal currency but generally do not affect gold.

What is the ROI?

However, One ounce of gold purchased in 1973 for $64 is now worth more than $900. In the long run, the outlook for gold market is strong as crude prices are rising and dollar is weakening.

It is likely that this scenario will continue and in the future years. Gold has always provided a high return over a long period of investment. The other factor, which adds to the increase in value is, decrease in gold mining (supply) and increase in demand. You are likely to get a ROI of 1000%, if you continue to invest in Gold for a long-term basis.

When is the best time to invest in gold?

The best time to invest in gold is right NOW! In fact it is always the best time to invest in gold. If you were to purchase a small amount of gold each month for the next 5 years, you would still beat inflation hands down.

Tushar Mathur writes regularly about Personal Finance and Investing at Everything Finance (http://www.everythingfinanceblog.com). He also writes about Green Living at Talking About Green (http://talkingaboutgreen.com).

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