With the stock market still way off its pre-2008 highs and the real estate and bond markets still encountering difficulty, an increasing number of investors are parking their wealth in gold coins, bars or other products.
Gold has increased in popularity in recent years as the rest of the economy is tanked. The reason is simple. Historically, gold has done well in times of economic decline, such as now. Gold tends to have a negative correlation to the rest of the economy, and while that correlation isn’t as strong as it once way, it is still valid.
When deciding whether to buy gold, investors must consider a number of factors in order to make a wise investment.
For starters, you must consider your financial situation. Do you have a lot of assets that you need to invest in a secure economy? Or are you a beginning investor seeking to build value. Gold is probably the perfect investment right now for folks who want to safe guard their wealth, while for folks seeking to build wealth, particularly those who want to build it quickly, a more high-risk, high-reward investment may be more proper.
Gold is most economically bought when it is bought in large quantities. If you plan on buying gold piecemeal, a little at a time, you’ll pay higher premiums. If you can afford to buy in bulk, that’s better because you’ll be able to get your gold at a lower price.
Another factor you need to consider is your knowledge and understanding of the gold market. Even if you have a financial advisor working for you, you need to understand the basics of any stock or commodity you invest in to get the best results from your investment. It’s your money, doing your homework concerning the fundamentals of the gold market and different gold investment vehicles can only help.
If you’re considering investing in gold, research the vehicle you’re using (bullion, bars, stock, coins, etc.) and also learn about the market fundamentals such as the impact of monetary policy and geopolitics on gold.
When deciding whether gold is right for you, you also have to consider which way you think the overall economy is going. If you feel that the economy is soon to improve, chances are that gold isn’t the investment for you, because of its negative correlation to the overall economy. However, if you feel economic conditions are set to decline further, gold is a very wise investment.
For investors concerned about a persistently struggling economy, gold may be a good investment if you research it thoroughly, understand its basic fundamentals, have the money to make a substantial investment and are right about the direction of the economy.