Diamonds Outweigh Gold or All that is Gold Does Not Glitter

Gold is the ultimate gilt investment or rather was, but diamonds are forever. There are experts for both sides of the argument. Perhaps gold is not a commodity but rather a currency. Perhaps diamonds are not a commodity but works of art. However they both have one common aspect; they are not assets with a capital value and an annual dividend like stocks and shares, one can only buy them and sell later at a profit. To make a decision, historical fluctuations of prices over specific time periods will have to be examined.

The Gold Story

As a bought commodity, it is not a tangible investment, proof of ownership is on paper and the metal is stored in some bank safe at any location in the world. The advantage of this is that buying and selling is a simple transaction and can be done easily but the owner will never really have the pleasure of viewing his purchase.

 The price itself is based on several factors, firstly as a commodity it is at the mercy of the whims of hoarders who will play the speculative game most effectively. Secondly its importance as a basis to several currencies in the world and governments are interested in maintaining prices both against sharp upward and downward trends. Conversely when important currencies experience sudden drops, very often gold will step in to offset this, creating a serious disruption to its steadiness that might revert negatively at any moment. Thirdly because of its historical importance and worldwide significance, there are very many players in the game and the predictability becomes an almost impossibility. Lastly it is a metal that has an industrial use, there is a cost to get it out of the ground and as such is not an investment item free of any other considerations.

There is no doubt that in long term, gold has held its value and shown increase against other currencies. It is however very difficult to use as a short time investment as it is very often necessary to have the fluidity and flexibility to make quick purchases and sales in the world of investments.