For investors seeking to hedge risk in an increasingly uncertain economic environment, gold has a lot to offer.
Gold is a universally recognized measure of wealth, having a role in trade and monetary systems since the earliest introduction of economics to human society. In tough economic times, gold has always been the safest investment, the ultimate hedge against the unthinkable.
While gold does not play as big of a role in trade and international markets as it once did, it is going a Renaissance of sorts thanks to the economic turmoil that has been afflicting the world for the past three years. More and more investors are turning to gold as a safe harbor, trusting in gold’s historic trend of rising in value during times of economic crisis.
Investing in gold is like investing in any other commodity: a risk investors should take with as much information and planning as possible.
Here are a few tips that savvy gold investors would do well to heed:
Pick the type of gold investment that’s right for you: For some investors it’s gold coins, others like bars and still others invest in gold stock or gold ETFs. For straightforward investing, gold bullion or bars are the simplest investment, more sophisticated (and well-heeled) investors may want to try their hand at investing in ETFs.
When picking a format, remember that when you buy gold bars or coins, you’re going to have to pay to store and transport them. Gold stock may be a more practical investment for many.
Buy in bulk: The more gold you purchase in one buy, the lower the premium above the actual price of the metal will be. Instead of making a few monthly buys, you may just want to buy gold every quarter when you can afford to make a lump purchase of the commodity.
Find a good dealer: To get good prices and to get gold that’s of the correct quality, make sure you use a competent, reputable dealer. Internet message boards and forums can help you as you background dealers prior to doing business with them.
Figure out the storage: Do you intend to store the gold yourself or are you planning to put it in a safety deposit box or have the dealer store it. Taking physical delivery can be inconvenient, but it can save you storage costs. Figure out what’s right for you before buying.
Long-term, the value of gold is expected to continue to climb. In the past three years, gold’s value has already risen threefold. By investing wisely, you can take advantage of gold’s resurgence as an investment commodity.
Investing in gold is a fun way to learn about another form of trading, and it’s a safe bet against the continued weakness of the world economy. Invest smart and you’ll reap the benefits.
