From a historic standpoint, investing in gold is a wise investment because it has been proven to continue increasing in value when other investments are depreciating. If you are interested in investing in gold, the folks at GoldSherpa can help you do just that. Let us review some of the reasons to invest in gold and how you should go about getting started with your investment.
Why You Should Invest in Gold
- Unlike other types of investments, such as paper currency and real estate, gold cannot be produced. The amount of gold that can be found on earth is limited and so the demand continues to grow.
- Gold prices make up for lost interest, especially in a market where most things are declining.
- Several banks worldwide have been increasing their holding in gold instead of selling it as part of their foreign reserves.
- Most gold consumption takes place in China and India. As their wealth increases, their demand for gold increases.
Ways That You Can Invest in Gold
- Gold Coins – One of the most popular ways of investing in gold continues to be gold coins such as the American Eagle coin, the Australian Nugget, the Canadian Maple Leaf coin and the South African Krugerrand. Most countries mint their own gold coins.
- Gold Bullion – Gold bars, also known as bullion range in size from one gram to 400 ounces. The downside of buying gold bullion is that you have to insure and store the gold.
- Gold Certificates – Gold certificates represent the ownership of gold bullion that is being held in a financial institution for safety reasons. The financial institution will charge a fee for storage and insurance.
- Jewelry – This represents the largest consumption of gold annually. It is a tremendous method of savings in economies that are developing.
- Gold Mutual Funds – This is one of the safest ways of buying and owning gold by allowing the owner to diversify among several stocks and letting the financial professionals make investment decisions.
- Gold Mining Stocks – Stock ownership is not only dependent on the price of gold but is also dependent on the price movement of the stock.
- Gold 401(k) – It is essential to have a solid plan when it is time for you to retire. Many people have traded in their traditional 401(k) plans for a gold 401(k) because of the enhanced levels of security that this will provide them with. Even during a financial crisis, gold does not drop in value. As other investments decline, gold continues to rise in value.
Disadvantages to Investing in Gold
- Although there are not many, there are a few disadvantages to buying gold. These disadvantages include the following:
- Gold will not pay you interest or an income
- Between 1980 and 2002, gold was in a serious bear market
- Your broker will not be likely to recommend gold funds
- Because gold funds have made some big moves over the past eight years, they are not doing as well now.