If you’ve landed on this page you’re most likely searching for information on investing in gold. After making numerous all time highs, gold has garnered the attention of investors worldwide. However, most investors have little or no experience buying gold. So, what happens to most investors is that they, unwittingly, receive inaccurate investment advice. Or, even worse, they end up falling for and buying some over hyped gold exploration stock.
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This is what tends to give gold a bad name among investors and understandably so. Most of us simply don’t want to get burned again as we did in the technology and real estate bubbles. And, while it is extremely important that we remain vigilant and selective with our capital, we should also be equally as careful not to form opinions about gold based on limited information or simple conjecture.
Gold Is The Opposite of Debt
When you read many of the blogs and webites about gold, sooner or later you’re going to run into the debate of whether investing in gold makes sense as an inflationary or deflationary hedge. People who get caught up in this argument are missing the bigger picture. We can isolate a given period of time through history and show where gold has fared well in inflationary and deflationary environments. If we look close enough, we can identify periods of time where gold didn’t perform in either environment. So what?
In order to make sense of gold and understand it’s role, we have to look back hundreds, if not thousands of years to gain proper perspective. When you do, you begin to realize that throughout time, monetary systems, governments and political structures have come and gone, but the one thing that has remained is gold. In fact, if we look back 100 years ago, almost all currencies were backed by gold. Today, that number is 0. Could there be a shift underway? We’re currently at record debt levels worldwide. The problem with keeping 100% of your money in paper based currencies, is that you leaving no room for error. And while history is littered with example after example of currencies becoming worthless, we have plenty of modern day examples. Just look at the Argentina in 2001-2 or Greece and Iceland in 2009.
Gold Is Insurance
First and foremost, gold acts and insurance protecting an investor against political uncertainty, economic disorder, and the tendency of Central Banks to over issue debt, print money. Gold’s most essential quality is that it is not someone else’s obligation or liability. Gold is the alternative to government lack of fiscal responsibility. It is the store of wealth independent of government. Owning gold allows you become your own Central Bank. And this begins to tell the story as to why, after thousands of years, gold not only exits, it is at an all time high. If that wasn’t enough, keep in mind, that gold is at an all time high vs. all fiat currencies.
Different Ways Of Investing In Gold
Today a gold investor can easily purchase gold bullion (gold in its physical form), from a dealer or, in some cases, from a bank. There are now exchange traded funds (ETFs), that mirror the movement of gold, providing investors direct exposure. And, there are new trading vehicles coming out regularly. Here are 5 of the more common ways to invest in gold, with a few examples.
1. Gold Bars – ranging from 1/10th an ounce and up
2. Gold Coins – Eagles, Krugerrand, Dinar
3. Gold ETFs – GLD
4. Mining Stocks – from juniors to the producing majors
5. Mutual Funds – numerous gold mutual funds to choose from
Although the list above is not exhaustive, investors looking to own gold directly have three choices: they can purchase the physical coin or bar, they can buy an ETF that tracks the spot price or, they can buy stock in companies who produce gold.
There are several articles and posts here centered around the concept of investing in gold. To keep up on the latest in the precious metals markets, check out Gold News Just be sure to take your time and conduct your due diligence.