Should you Look at Investing in Gold?
Gold has always brought wealth and riches to mind, whether it is gold bars, or chests brimming with gold coins. However, lost to many is the fact that gold as an investment has done extremely well over the past years, outperforming most other investments over the period. In this article we will explore whether gold is a viable option for your portfolio, the methods of investing in precious metals, and the pros and cons of investing in gold.
Of all the precious metals, gold is the most popular as an investment. Investors generally buy gold as a hedge or safe haven against any economic, political, social or currency-based crises. These crises include investment market declines, currency failure, inflation, war and social unrest. Investors also buy gold during times of a bull market in an attempt to gain financially.
Drawbacks of Gold Investments
Gold doesn't pay income or interest.
Central banks have tons of bullion which they occasionally threaten to sell.
If you don't count the last five years, gold stocks have not done well.
Benefits of Investing in Gold
The dollar is weak and getting weaker due to the state of the American economy, combined with rampant government borrowing
Central banks in several countries have stated their intent to increase their gold holdings instead of selling.
Most gold consumption is done in India and China and their demand is increasing with their increase in national wealth.
With the recent devaluation of many international currencies, the U.S. dollar was the international safe haven of last resort. We are seeing signs of this ending due to many financial factors, the most important one being a falling
Real World Ways to Invest in Gold
Gold bullion. - Refiners produce gold bars from one gram to 400 ozs.
Gold coins. - The most popular are one oz coins such as the American Eagle, Canadian Maple Leaf, the South African Krugerrand, and the Austrian Vienna Philharmonic.
Gold certificates. - A certificate which represents ownership of gold bullion held by a financial institution for convenient and safe storage.
Gold futures and options. - A futures contract traded on one of the futures exchanges, such as the COMEX in New York.
Gold Mining stocks. - Stock ownership of a company traded on one of the exchanges. The price movement is dependent not only upon the price of gold, but also upon the future of the corporation and management
Jewelry. - Representing the largest consumption of gold each year, jewelry is a major method of savings in developing economies.
Exchange Traded Funds (ETF)- Perhaps the safest method of buying and owning gold by buying shares in a fund based solely on the existing market price of gold
Gold Mutual funds. - A relatively safe method of buying and owning gold stocks allows the owner to diversify among many stocks and allows the investing decisions to be made by a professional.
Does Gold have a Spot in your Portfolio?
As you can see, Gold is a viable investment, providing much needed hedges against economic and currency risk. Gold, like any other holding, is a great addition anybody’s portfolio in the right conditions. However, any investor needs to make sure that it is part of a balanced asset allocation strategy according to age, risk tolerance, and long term investment goals.
For more Gold Coin or Gold Investing Questions, please contact one of our advisors who can help with your investing in Gold needs.
