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Alternative Investment Markets: What are they and how do they work?

by / 0 Comments / 16/07/2013

russia jewels

In recent years the default, standard, generic investment markets of stocks and shares have lost their edge. Since the recession, people have been more cautious where they invest their money, with good reason; bankers and brokers have seemingly been frivolous in the risks they took to multiply the cash. This has meant that things have been a little slow in terms of economic stability and growth. However many are starting to seek out ‘alternative investment markets’ to sink their money into.

This begs the question what are alternative investment markets and why are they ‘alternative’? Well, one can look at the sub-sector of the London Stock Exchange that shares the same name. This being a sub-market that is designed to allow smaller firms more flexibility, giving them more of a chance to thrive. This includes no limit on share numbers amongst other things. However, this still belongs within the world of the Traditional Investment Market because it deals in stocks and bonds, just on a smaller scale. The true sense of the alternative investment market is the world of tangible goods such as art, jewellery, coins stamps and precious metals.

Since the recession back in 2008 you will, no doubt, have seen the high streets become littered with cash-for-gold shops, and will have learnt the catchy jingos to their crappy radio adverts. This is because as the traditional markets have dropped in terms of money making potential, capital like gold and silver, for example, rarely fluctuate in price. This is evident with the US price per troy ounce, which was $590 in 1980 whilst in 2005 it was $513. However, since the recession prices recorded in 2010 have shown gold to almost treble in price to $1410, showing a huge new demand. The reason for this is because as currencies become weak economically, gold becomes a hedge against inflation or deflation, because as economies falter the supply and demand for alternative investments go up. This makes gold a wise future investment because in times of trouble it is a good back up for investors.

One interesting company that deals in these sorts of alternative investments is a site called Soviet Jewellery who specialise in investing in old soviet made jewellery. Soviet gold is one of the most unique commodities around, and one of the most valuable around too, with its prices being double that of its imperial Russian counterpart. This is because not only is Russian Gold one of the best gold producers around but it is from a period that is unique to Russia. According to their website Soviet Gold is growing at nearly 200% per year, meaning that for investors it is a tidy alternative to the risky game of stocks and shares.

Towards the end of the Soviet Union, back in the early nineties, the government of the time realised their economy was deteriorating. So in a last bid to revitalise the stagnant affair they sold off two-thirds of their gold reserves in a year to recoup money against a communist way of life that was systematically a failure. The Soviet Union’s failure meant that they had to resort to the alternative investment markets through the avenue of gold reserves. Gold may seem like such an old fashioned type of currency, being depicted in tales of pirates and medieval knights, but it still plays a huge part in the stability of capitalist economies to this day.

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BY: Craig Cunningham