Should I Buy Gold?
 | Investors often ask me, "Should I buy gold?" The answer is simple, in my opinion: Gold should be a part of every investor's portfolio. Whether or not you believe gold is going to appreciate short-term or not is a matter for speculators, but smart investors who would like a diversified portfolio may wish to own gold for its protective qualities. Gold is a wonderful diversifier, and it offers protection against many adverse events in the marketplace, as we will discuss below. spot gold Why Should I Buy Gold? Gold adds another layer to a portfolio filled with stocks and bonds. Gold is a completely different asset class than stocks are. Even the ETF that trades just like a stock behaves like gold because it is tied to the price of bullion. As compared to the stock market, gold has behaved in the roughly inverse fashion to the stock trading game since 1971 when the gold standard was abandoned. For traditional buy and hold investors, gold can offer returns when the stock market underperforms. gold spot Gold Offers Protection worthwhile Gold protects against inflation. Inflation happens when the money supply is increased, causing each unit of currency to be worth less. Then this happens, prices for goods and services will rise. This will cause the buying price of gold to rise as well, because it will take more of the dollars (which are each worth less as a result of inflation) to buy an ounce of gold. The stronger the inflation, the faster gold will rise. Many investors keep some gold within their portfolio for just this reason. Gold Investors are Prepared for Disasters Since the economy of each and every nation (and the worldwide economy) is founded on trust, it can collapse when that trust is eroded. Look at this: the paper that money is printed on just isn't worth anything. It is worth value as a result of trust that people have in the government and the economic system. The moment a nation defaults on its debt, the amount of money becomes worthless-it is literally not definitely worth the paper on which it is printed. Gold, however, will almost always be worth something. In this way, it is currency. So, some people enjoy having gold around as a protection against a bank failure, a war, civil unrest, or severe political climate changes or another disaster that might cause a currency decline or failure. Indeed, history demonstrates when a nation is facing war, economic or political uncertainty, or a financial crisis, the demand for gold rises sharply. Know Your Investment Strategy You have to decide which kind of investor you are, so that you can determine how to work gold into your portfolio. For instance, if you are risk averse, and you do not want to store gold within your house, then you may want to get a gold account, gold certificate, or buy shares from the gold ETF. If you feel gold will appreciate in the long run, and you want to reap higher rewards, you are able to invest in mining stocks and the gold miners ETF, both of which are leveraged, meaning they multiply advances and declines in the gold price. For a buy and hold investor with average risk tolerance, 25-30% of a portfolio invested in gold is reasonable. A more speculative investor may want to hold a higher percentage in gold, and employ more leveraged instruments like gold stocks and futures. There is no right or wrong amount of gold to carry. There is only the amount that is right for you. Knowing Where to Buy Gold Owning gold has never been easier than it is today. Once you know your strategy, then you can learn to pick out which investment vehicles make the most sense to you. There are many ways to own it, several of which can be finished with clicks of a mouse. It is possible to, of course, opt for gold bullion or gold coin ownership. If you want to own it but have somebody else take possession of it, then gold accounts and/or gold certificates are to suit your needs. If you want to trade it being a stock, then the gold ETF will be your choice. For those who want a a bit more risk with the potential for higher rewards, you can find gold mining stocks, the gold miner's ETF and leveraged ETF funds. gold spot |
