In the wake of the credit crunch signs for pawnbrokers have suddenly appeared out of nowhere, it’s almost impossible to move without seeing advertising for someone who wants to buy your gold from you, but why gold in particular? Gold has for thousands of years been one of the main currencies in the world, until the start of the 19th century the gold standard was the basis for our international monetary systems and it wasn’t until the 1970s when the US abandoned the gold standard that gold was finally confined to the history books at the staple of our economy.

Since then the price of gold has fluctuated, sometimes significantly, but the spike in price currently experienced is almost unique. In the wake of the credit crunch investors turned to commodities that they knew had a fixed price, something that wouldn’t disappear like a corporate bond or an equity, and gold was the main haven that these investors turned to.

The result was, of course, that the gold value went through the roof, and there doesn’t appear to be a sign of that abating. Even as the economy recovers gold remains popular, and it is this popularity in the markets that is the reason behind people being encouraged to sell or pawn their jewellery in return for cash, quite simply, the pawnbrokers know that they can sell that gold on for a profit.

We should be careful, however. Anyone who has taken even the most casual interest in the financial markets will know that the current economic predicament was started with a massive house price we could be in danger of inflating another bubble, one based on commodities and particular gold.

Of course, the thing with bubbles is that they are formed because people see the opportunity to profit from them, and as spread betting companies like Trade Fair offer their traders just about any market, there are masses of people who are investing in gold right now, all of this is driving the price up further and further.

What goes up must come down, though, and if you do decide to invest in gold you should be aware that sooner or later there will be a correction in price. If you are careful and catch the signs early, however, gold could give you a significant return.