Imagine yourself desperately hoping to find a small glint of gold, sitting in a stream swirling water in a bowl and dreaming of striking it rich. Gold holds a prominent place in our economy now, although america has come a long way since the 1850s. Following is an extensive introduction to advice on where beginners should start, the dangers and benefits of each approach, and gold from how we get it to to invest in it and why it's invaluable.

It was also hard to dig gold and the harder something is to obtain, the higher it's valued. Over time, humans began using the precious metal as a means and collect and store riches. In reality, early paper monies were normally backed by gold, with every printed invoice corresponding to an quantity of gold stored in a vault someplace for that it may, technically, be exchanged (this rarely occurred ).

So the link between gold and paper currency has been broken modern monies are fiat currencies. But, the yellow metal is still loved by people. Where does need for gold come in the demand sector that is largest by far is jewelry, which accounts for around 50 percent of gold demand. Another 40 percent comes from physiological investment in gold, such as that used to make bullion, coins, medals, and gold bars.

It is different than numismatic coins, collectibles that trade based on requirement for the particular kind of coin as opposed to its gold content.) Investors in gold comprise people, central banks, and, more lately, exchange-traded funds that purchase gold on behalf of the others. Gold is often regarded as a safe-haven investment.

This is one reason that investors tend to push the price of gold up when financial markets are volatile. Since gold is a great conductor of electricity, the demand for gold comes for use in things like technology gadgets, heat shields, and dentistry. What's the amount of gold is a commodity which trades based on supply and demand.

Though economic downturns do, obviously, lead from this industry the demand for jewellery is constant. Push its cost higher, when investors are concerned about the market, they buy gold and dependent on the rise in demand.

How much gold is there Gold is quite plentiful in nature but is difficult to extract. For example, seawater contains gold -- but in small amounts it would cost more than the gold will be worthwhile, to extract. So there is a big difference between the availability of gold and how much gold there is on earth.

Gold prices or advances in extraction methods can shift that number. Gold has been discovered in amounts that suggest it may be worth if costs rose extracting near thermal vents. Source: Getty Images. How do we get gold Although panning for gold was a frequent practice throughout the California Gold Rush it's mined from the ground.

A miner may produce gold as a by-product of its mining efforts. Miners begin by locating a place where they believe gold is situated in large enough amounts that it can be obtained. Then agencies and local governments need to grant the company permission to develop and run a mine.

How well does gold maintain its worth in a downturn The answer depends upon how you put money into gold, but a fast look at gold costs relative to stock prices during the bear market of this 2007-2009 downturn provides a telling example.

This is the most recent example of a material and prolonged stock downturn, but it's also an especially dramatic one because, at the time, there have been very real concerns regarding the viability of their global financial system. Gold performs well as traders hunt out investments that are safe-haven when capital markets are in chaos.

Investment Option Pros Disadvantages Cases Jewelry High markups Questionable resale value Just about any piece of gold jewellery with adequate gold material (generally 14k or higher) Physical gold Immediate exposure Tangible ownership Markups No upside past gold cost changes Storage Can be difficult to liquidate Collectible coins Bullion (noncollectible gold bars and coins) Gold certificates Immediate exposure No requirement to own physical gold Just as good as the company that backs them Only a few companies 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 exposure Highly leveraged Assets are time-limited Futures contracts from the Chicago Mercantile Exchange (constantly updating as old contracts expire) Gold mining stocks Upside from mine growth Usually tracks gold prices Indirect gold exposure Mine operating risks Exposure to other commodities Barrick Gold (NYSE: ABX) Goldcorp (NYSE: GG) Newmont Goldcorp (NYSE: NEM) Gold mining-focused mutual funds and ETFs Diversification Upside from mine growth Usually buys gold prices Indirect gold exposure Mine operating risks Exposure to other 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 growth Usually tracks gold prices Consistent wide margins Indirect gold vulnerability Mine working risks Exposure to other commodities Wheaton Precious Metals (NYSE: WPM) Royal Gold (NASDAQ: RGLD) Franco-Nevada (NYSE: FNV) Jewelry The markups from the jewelry industry make this a bad option for investing in gold.