Frequently Asked Questions

At Blackstone Gold Group, our priority is to provide timely dissemination of information pertaining to an investment in gold. Therefore, this Q and A page will be summarily updated to keep you abreast of current changes in the exciting climate for gold investing. Here are some answers to our most frequently asked investor questions!

Why do people invest in gold?

Gold has attracted investors throughout the centuries, protecting their wealth and providing a "safe haven" in troubled or uncertain times. This appeal remains compelling for modern investors, although there are also a number of other reasons that underpin the widespread renewal of investor interest in gold.

• A. SAFE HAVEN - In volatile and uncertain times, there is typically a "flight to quality" as investors seek to protect their capital by moving it into assets considered to be safer stores of value. Gold is among a handful of financial assets that do not rely on an issuer's promise to pay, offering refuge from default risk. It provides insurance against extreme movements that often occur in the value of traditional asset classes in unsettled times. More and more people understand that by investing in gold, they are protecting themselves against a range of risks, such as weakness of the US dollars, unexpected inflation, and low returns on other assets. Some people simply want to own an asset they can trust, because it is real and holds its value over the long term.
• B. PORTFOLIO DIVERSIFICATION - Most investment portfolios are invested primarily in traditional financial assets such as stocks and bonds. The reason for holding diverse investments is to protect the portfolio against fluctuations in the value of any single asset or group of assets that react in a common fashion. Portfolios containing gold are generally more robust and less volatile than those that do not.
• C. INFLATION HEDGE - There is substantial evidence to support the view that gold is a good long run hedge against inflation. Market cycles may come and go, but - over the long term - gold keeps its purchasing power. Its value, in terms of the real goods and services that it can buy, has remained remarkably stable. In contrast, the purchasing power of many currencies has generally declined due to the impact of rising prices for goods and services. As a result, gold is often bought to counter the effects of inflation and currency fluctuations.
• D. DOLLAR HEDGE - Gold is often used as an effective hedge against fluctuations in the US dollar, the world's main trading currency. If the dollar appreciates, the dollar gold price falls, while a fall in the dollar relative to the other main currencies produces a rise in the gold price. While this may also be true of other assets, gold has consistently proved among the most effective in protecting against dollar weakness.
• E. RISK MANAGEMENT - On the whole, gold is significantly less volatile than most commodities and many equity indices. In this respect, it tends to behave more like a currency. Including assets with low volatility in a portfolio will help to reduce overall risk, with a beneficial effect on expected returns. Risk factors that may affect the gold price are quite different in nature from those that affect other assets.
• F. DEMAND AND SUPPLY - As is true of all asset prices, gold's price moves in response to the changing balance between supply and demand. Mine production is relatively inelastic due to the long lead times that exist in gold mining, which explains the rally in the gold price since 2001 has still not engendered an increase in production levels. Meanwhile, demand has shown sustained growth, due at least in part to rising income levels in gold's key markets. This has created the foundation for the most positive outlook the precious metal has known for a quarter of a century.