Investing 101: Gold


Gold is a vital investment for people who are looking for ways to cover their assets should the global economic market come crashing down. When the stocks are down, investors always turn to gold. Apart from being an effective hedge against a weak economy, gold is also a currency that all countries accept as a form of payment for products and services.

“Gold is a very effective hedge against uncertainty because even as investors are watching the value of their equity investments plummet, gold still has value,” said Tom Pawlicki, an expert on the precious metals market at MF Global. “In that way, gold can help diversify away some of the risks in an investor’s portfolio,”

Here are a few ways on how you can start investing in the gold market:

Gold bullions

Nothing beats owning physical bullions. Fiat money will end, Wall Street could crash, but gold can always be traded. As long as you have physical gold, you will always have a means to pay for a product or service. Gold bullions weigh around 400 ounces per bar, and costs around $520,000 each.

For those who can’t afford to buy gold bars, there are alternative ways in which you can still purchase the precious yellow metal. Gold can now be bought per ounce, and can even be stored in different vaults around the world without investors having to worry about minimum gold deposits.

Be prepared though, since investing in physical gold is like being on a wild rollercoaster ride. Gold is highly volatile and its prices can go very high one minute but decrease dramatically the next.

Experts suggest selling gold in their good delivery forms. Good delivery bars are the safest to buy and they’re the easiest to liquidate. If you’re planning to purchase gold bullions, make sure to only transact with firms that are trusted gold dealers. You may check a business’ status using sites like the Better Business Bureau.

Paper gold

As the name suggests, paper gold is just a representation of gold prices and doesn’t make investors owners of the precious yellow metal. Paper gold can be in the form of gold certificates, future contracts, or shared funds like ETFs. Paper gold is primarily used to diversify an investor’s portfolio and not as a means to use as hedge to a weak economy.

Investing in gold through stocks is cheaper but experts recommend that new investors get exposure first on physical gold. That’s because merely investing in paper gold defeats the purpose of owning the precious commodity, which is to store wealth. Don’t worry too much about the price of physical gold, as investors don’t need to buy whole bullions or bars just to invest in the commodity. Some businesses now sell gold by the ounce in order to open the precious metals market to more private investors.

Before investing in gold, may it be physically or by stocks, make sure to do your research first on the precious metals market. Just like with any forms of investment, success in trading gold relies on an investor’s technical and fundamental analysis skills.

2 Responses to Investing 101: Gold

  1. I keep the gold portion of my investment portfolio to around 5% or so. I don’t buy all the hype that people claim to make with with. I invest most of my money in good, strong companies and use gold as a small hedge. It has worked great for me so far.

  2. For great volatility in gold, check out $DUST and $NUGT ETNs, but be careful with these, they are not for beginners.

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