The value of an investment in gold can rise or fall with the price of the precious metal itself. However, many investors hold the metal as a diversifier in their portfolios or as a hedge against inflation or as a safe-haven asset during times of economic uncertainty. Investors can choose to buy physical gold, which is most commonly held as coins and bullion; purchase shares of a company that mines the metal; or invest in gold derivatives or exchange-traded funds.
Regardless of whether it serves as an inflation hedge, an investment in the global economy or a store of wealth, gold does carry some unique costs and risks. For these reasons, it’s important to understand how holding gold can impact your bottom line.
As the world’s most popular commodity, it should come as no surprise that many investors use gold in their portfolios, as an alternative to paper currency or as a hedge against inflation. Historically, the metal has been a desirable form of money, and its unique properties have helped it retain value during periods of political unrest and economic uncertainty.
While some argue that the monetary qualities of gold have diminished in today’s world, others assert that it remains a valuable diversifier and a key element in portfolios. Those who believe in the enduring values of gold may be able to find the best time to purchase it: when prices are low.
For example, in the last decade, the price of gold declined versus that of the S&P 500 Index by approximately 3.5%. Another article on gold investment can be found at alevemente.org gold article
Since central banks have similar needs for monetary gold, it seems appropriate to have one method for accounting and reporting for this asset. This will allow for comparability and strengthen the accountability framework for central banks. Currently, monetary authorities apply a variety of different treatments for this asset, which makes it difficult to assess the effectiveness of their accountability frameworks. This Guidance addresses this issue and offers a model for recognizing, measuring and reporting the fair value of monetary gold. In doing so, it draws upon the principles in IFRS 9 and IAS 40 Investment property. This is because the fair value model applicable to investment property could be used for determining the amount of a monetary gold deposit or cash-on-hand balance.