Imagine yourself dreaming of striking it rich , desperately hoping to find a tiny glint of gold and sitting at a flow swirling water in a pan. America has come a long way since the 1850s, today, but gold nonetheless holds a place within our economy. Following is a comprehensive introduction to hints on where beginners should begin, the dangers and advantages of each approach, and gold from how it is obtained by us to how to invest in it and why it's valuable.

It was also difficult to dig gold out of the earth -- and the more difficult something is to obtain, the greater it is valued. Over time, people accumulate and store and started using the metal as a way riches. In fact, early paper monies were generally backed by gold, with every printed invoice corresponding to an quantity of gold stored in a vault somewhere for which it may, technically, be exchanged (this rarely happened).

So the link between gold and paper money has been broken These days, modern currencies are largely fiat monies. But, people still love the metal. Where does need for gold come in the demand industry by far is jewelry, which accounts for around 50% of demand. Another 40 percent stems in direct investment including that used to create medals, bullion, coins, and bars.

It's different than numismatic coins, collectibles that exchange based on requirement for the specific kind of coin as opposed to its gold material.) Investors in physical gold include people banks, and, more recently, exchange-traded funds that buy gold on behalf of the others. Gold is often regarded as a investment.

This is one reason that investors tend to push the price of gold when markets are volatile. Since gold is a tokenbyte.net good conductor of electricity, the rest of the demand for gold stems for use in matters like gadgets, heat shields, and dentistry. How is the amount of gold is a commodity that deals based on supply and demand.

Though economic downturns do lead from this business, the requirement for jewelry is quite constant. When investors are worried about the economy, they frequently buy gold, and dependent on the increase in need, push its cost higher.

How much gold is there Gold is actually quite abundant in nature but is difficult to extract. By way of example, seawater contains gold but in such amounts it might cost more to extract compared to the gold would be worth. So there's a difference between the access to gold and just how much gold there is in the world.

Advances in extraction methods or gold prices can change that number. Gold has been discovered close to undersea vents. Source: Getty Images. How do we get gold Although panning for gold was a frequent practice throughout the California Gold Rush, now it's mined from the floor.

A miner might create gold as a by-product of its mining attempts. Miners begin by finding a place where they believe gold is located that it can be obtained. Then agencies and local authorities need to grant the business permission to build and operate a mine.

How does gold hold its worth in a downturn The answer depends upon how you invest in gold, however a fast look at gold prices relative to stock prices throughout the bear market of the 2007-2009 recession provides a telling example. Between Nov. 30, 2007, and June 1, 2009, the S&P 500 index dropped 36%.

This is the latest example of a substance and prolonged inventory recession, but it is also a particularly dramatic one because, at the moment, there have been very real concerns about the viability of their global financial system. When capital markets are in turmoil, gold often performs comparatively well as investors seek out investments.

Investment Option Pros Cons Examples Jewelry High markups Questionable resale value Just about any piece of gold jewellery with sufficient gold material (generally 14k or high ) Physical gold Direct exposure Tangible ownership Markups No upside beyond gold cost changes Storage Could be hard to liquidate Collectible coins Bullion (noncollectible gold bars and coins) Gold certificates Immediate exposure No requirement to own physical gold Only as good as the company that backs them Just a few firms issue them Mostly illiquid Gold ETFs Direct exposure Highly liquid Fees No upside beyond gold price changes SPDR Gold Shares (NYSEMKT: GLD) Futures contracts Small up-front capital required to control a large amount of gold exceptionally liquid Indirect gold vulnerability Highly leveraged Assets are time-limited Futures trades by the Chicago Mercantile Exchange (continuously updating as old contracts expire) Gold mining stocks Upside from mine development Usually buys gold costs Indirect gold vulnerability Mine working risks Exposure to additional commodities Barrick Gold (NYSE: ABX) Goldcorp (NYSE: GG) Newmont Goldcorp (NYSE: NEM) Gold mining-focused mutual funds and ETFs Diversification Upside from mine development Normally tracks gold costs Indirect gold exposure Mine working risks Exposure to additional commodities Fidelity Select Gold Portfolio (NASDAQMUTFUND: FSAGX) Van Eck Vectors Gold Miners ETF (NYSEMKT: GDX) Van Eck Vectors Junior Gold Miners ETF (NYSEMKT: GDXJ) Streaming and royaltycompanies Diversification Upside from mine development Normally tracks gold costs Consistent wide margins Indirect gold exposure Mine working risks Exposure to other commodities Wheaton Precious Metals (NYSE: WPM) Royal Gold (NASDAQ: RGLD) Franco-Nevada (NYSE: FNV) antiques The markups in the jewellery industry make this a bad option for investing in gold.