How safe is gold as an investment?

How safe is gold?  How safe is gold as an investment?

If you just look at the historical gold price chart and observe the way gold price had increased over the past two weeks, you might think that gold as an investment is really safe.

It seems that gold price will reach $2000 per Troy ounce soon.

However, you must not ignore the power of CME Group.

If this is the first time you have heard of CME Group, that means you are in the precious metal investment for a very short while.

CME Group owns and operates the COMEX, which is the New York Mercantile Exchange and Commodity Exchange.

CME Group has the power to affect gold and silver pricing without direct buying or selling.

A few months ago, it hiked the margin requirements a few times for silver trading, and sent the silver price from nearly $50 to $30 in a matter of days.

Many investors and speculators were caught unaware, and they lost their capital and owed debt due to borrowing on margin.

If you think that gold as an investment is safe from the power of CME Group, think again.

Just a few days ago, when CME Group hiked the margin requirement for gold by 22%, gold price suffered a sharp one day fall.

How safe is gold as an investment?

While physical gold has a certain appeal, and you can keep the gold bars and gold coins for decades, gold as an investment is not really safe.

Many factors affect gold price.

When you are happy that the gold price soars everyday, the decision of CME group to increase margin requirement can send the price falling immediately.

CME group had shown itself to be decisive.  It could change the margin requirement a few times a week to scare off investors and speculators, and brought the price of precious metals back to a reasonable rate.

Judging from the effect of CME group on the silver prices a few months ago, it is not too far fetch to expect gold price to drop by 40% if it really takes drastic action.

That means gold price could fall from the current $1871 per Troy ounce to just $1200 per Troy ounce.

Everything is possible in the world of investment.

If you want to buy gold as an investment, make sure that you have the power to hold, and to sustain the volatility of the market.

Make sure that you are mentally prepared for all eventuality.  Make sure that you follow the announcement of CME closely.

Just bear in mind that in a volatile market, nothing is really safe.

Gold is the same as other investment, where you can potentially gain huge profits or suffer losses.

If you are buying gold on margin, the potential loss is unlimited.

How safe is gold?  How safe is gold as an investment?  Not safe at all. Or rather, as safe as the knowledge and alertness of the investor.