Safe investment for uncertain times

It is often heard that gold is a safe investment for uncertain times. From the historical point of view, the value of gold usually increased during crises, collapses, or wars. In such difficult times, it is only natural that investments in shares or bonds are abandoned and that people turn to the stable gold ore. Furthermore, gold is resistant to market turbulence and inflation. Therefore, it may be a perfect security for a situation when the value of the owned means decreases.

Is investment in gold profitable? It is enough to look at how its prices changed during the last five years. In January 2004 an ounce of gold cost about 1550 PLN; in September 2009 it reached the level of 2850 PLN.

The price of gold sold at the Mint of Poland (Mennica Polska S.A.) depends on two factors, both of which are equally important. The first of them is the price of gold in London, i.e. London Gold Fixing, which is announced twice a day each working day in Great Britain. The second factor is the American dollar to zloty exchange rate. From January 2004 to September 2008, the value of dollar regularly dropped. From the level of 3.7 it decreased to the historically low price of a little above 2 PLN. After the collapse of Lehman Brothers the trend changed and the dollar rate increased until the beginning of 2009. During that period the prices of gold reached record high. At the dollar rate of 3.6 PLN, the price of gold amounted to 4000 PLN for an ounce (31.1 g).

What are the prospects for gold? The rising demand on this ore from quickly developing economies, such as India and China, contributes to the increase in its output. However, the resources are limited and their extraction is more and more expensive, factors which significantly influence prices for ready-made products. At the moment, large international concerns as well as private investors invest in gold. Poles also take to investing in gold and they are interested in the offer of the Mint of Poland more and more frequently.