Gold Investment: An Insurance Policy in Turbulent Times

Gold investment is an opportunity that is often overlooked in the investment world today. Investing in gold can provide a hedge against inflation as well as an investment that moves independently of other financial markets. There are several ways to invest in gold including certificates, funds, and purchasing physical gold. Here are a few things to consider about gold investments. 

Inflation Hedge

Gold is an attractive investment because it provides a hedge against inflation. When you are an investor, you have to do your best to stay on top of inflation. If inflation increases at a higher rate than your investments, you will lose money. One of the great things about gold is that it tends to move up in value with inflation. If inflation is increasing, the value of the gold is going to increase as well. Gold has intrinsic value and it is a physical commodity. It will never lose all of its value. In fact, during down economic periods, gold tends to become even more valuable.

Market Neutral

Another good thing about investing in gold is that it is considered to be market neutral. This means that it moves independently from the stock market or other financial markets. Many other types of investments are highly correlated to particular markets. Gold and silver values tend to move independently from anything else.

Precious Metal Funds

One way that you could get involved with gold investment is to buy into a precious metal fund. Precious metal funds provide an easy way for investors to put money into gold and silver. This is basically like investing in a mutual fund. You are going to buy shares of a fund and the fund management company is going to purchase physical gold or silver. They are going to warehouse the gold for you and you are going to own a portion of the entire amount of gold.

Buying Physical Gold

Another option that you have is to purchase physical gold. By investing in gold bullion, you are going to be able to be in control of your investment at all times. Some people are skeptical of investing in another company to hold their gold for them. Since they cannot physically see the gold. If you plan on purchasing gold and keeping it yourself, you will need to have some type of protected location to warehouse it in. Many people will build a large safe in their homes or keep it somewhere else that is safe. You could also purchase bars of gold and hire another company to warehouse them for you.

Buying Too Much

Even though gold can be a good long-term investment, you do not want to put too much of your portfolio into this one investment. Over the long-term stocks have performed better than gold in many cases. Therefore, you could be missing out on better returns from other investments. Diversification is the key to a good portfolio.

blog comments powered by Disqus
Scottrade