Know the factors that affect your gold stocks investment

I t’s important to know the factors that influence gold stocks before taking the plunge of investing in this commodity. Like most commodities the primary factor is supply and demand, which is to say that the price of gold stocks will rise when there is a high demand which outstrips supply – which is a common occurrence since gold is a finite resource.   However there are other price influencing factors that one must bear in mind when investing in gold stocks, as these factors will determine whether the investment you make is beneficial or badly timed. The central banks and IMF sometimes purchase gold and increase their reserves, which has an influence on the gold price as the more they buy the higher the price for an investor who wishes to get their hands on gold stocks. Gold industries which experience consumer demand also influence the price of gold and subsequently gold stocks.   The aforementioned are just some of the major factors that determine the price of gold and consequently gold stocks prices. Like most investments one needs to keep abreast of the news and data around factors which will influence the gold price. Buying when there is little purchasing activity and low demand, and thus allowing the investment to reap the benefits when the demand for gold rises.