Investing in gold

Investing in gold is an excellent strategy when the country is in a recession. Gold and gold stocks are at an all-time high and are predicted to continue increasing. Gold is in a bull market and is completely driven by supply and demand, including hoarding and disposal. Hoarding and disposal plays a large role in affecting the price of gold. There is actually a large quantity of hoarded gold versus the gold that is in production therefore the price of gold is affected by changes in sentiment.

Every year approximately 2,500 metric tonnes of gold are pulled out of the earth. The supply for gold is about 4,000 to 5,000 metric tonnes of gold each year, causing the demand for gold to be about 60% or higher on an annual basis. A shortage of gold causes it to be priced higher in the market for consumers. As the shortage of gold increases, the price for gold continues to rise, causing the stock to increase. Currently gold is one of the best investments because of the supply and demand.

Investing in Gold
There are several ways to invest in gold; you can buy gold, buy gold stocks, or buy gold derivatives. If you have never invested in gold before, you should only plan on allocating about 5% of your capital toward gold. Once you gain experience with gold, you can begin investing more money into it. The best way to invest in gold is to diversify across companies in that sector. Diversifying will decrease the potential risk and will dilute the potential rewards of your portfolio. A smart investor will realize that they can sow capital and expect a reasonable harvest in return. The return on gold may not always be immediate and it could take a few years but the reward will come.

Investors that like risk will deploy capital that is crucial to their portfolio because it will help them in the end. Actual physical gold is a strong investment because it is the insurance portion of gold investments. Gold will always maintain some type of value no matter what happens in the economy. During a recession stocks tend to plummet to all-time lows because of layoffs and a poor housing market. Several investors can lose money, but if they invest in gold, they never have to worry about it plunging to zero. Gold needs to be thought of as a long-term investment strategy. Several people purchase gold for their children, grandchildren, and even great-grandchildren because it will hold some type of value for centuries.

Since the stock market is always changing on a day-to-day basis, investing in gold will protect your foundational portion of your investment portfolio and will protect you from an unpredictable future. Owing gold in your portfolio is similar to owning insurance on your car or home. Hopefully you never experience an auto accident or house fire, but if you do, your insurance will help protect you. Gold is similar to insurance for your financial portfolio. It will be there to protect your financial future. Since the US dollar will lose value due to inflation, the cost of living increases. Gold protects investors from nonlinearities like inflation. The value of paper currency is not sustainable and investors that have lost everything in the stock market never realized that. The nice thing about having gold in your possession is that it will protect you during times of national crisis like 9/11. With the bombing of the financial world, several investors were unable to access their accounts for weeks. Investors that had physical gold didn't have to worry about their investments because they already had it in their possession.

Gold also protects your finances. If your identity is stolen and you lose access to your personal information, you may not be able to access your personal accounts, but you can cash in on your gold so you don't end up losing everything. Gold is also there to protect you if someone sues you and you end up losing. You could wind up losing everything, except your gold. Physical gold is simply another form of insurance and everyone should have some physical gold in their possession.

Buying Gold
It is easy to buy physical gold. You simply need to find a coin dealer in your area and exchange money for gold. Gold can also be purchased off the internet or over the phone. If you have gold and you want to sell it, you can do the same thing. Go into a coin shop and the dealer will give you a check. There are actually advertisements for companies that buy gold, all you need to do is ship them your gold and they will cut you a check.

One of the best physical gold investments is one-ounce national bullion coins. The coins have a low premium compared to other types of physical gold. Bullion coins give you the most gold for your paper dollars. Gold bullion coins are also recognized worldwide. Australian Nuggets can be sold in an American coin store or any coin store in the world. Gold bars on the other hand are difficult to sell because buyers have to make sure they are legitimate and the stated gold content is correct. Another great thing about bullion coins is that they are small so they are easier to store than a gold bar is. Gold bullion coins are nice because you can take them at any time and sell just a fraction of them. If you have 10 bullion gold coins, you can sell one and still have 9 more in your portfolio.

Protecting Your Gold
Once you purchase your gold, be quiet about your purchase and keep it hidden. Several people are uncomfortable with holding gold in their home because they think it will be stolen. It is a risk to keep it in your home, but if no one knows you have it, the chance of theft will be eliminated. Since few people have investment gold sitting in their home, thieves won't look for it, especially if you are cleaver about hiding it. The best way to protect your gold is to be discreet about it and don't tell anyone except your coin dealer.

Since many people are uncomfortable keeping physical gold in their home, they opt to invest in gold and allow a third party to store it. Third party gold investing is a low-risk investment. If you live in an area with high crime ratios, then investing in gold with a third party is a good idea. Several people invest thousands or millions of dollars in gold and keeping that gold in the basement isn't a smart idea. The bad thing about investing in gold with a third party is that you don't always have easy access to it if you are caught in a crisis. Third party gold can be purchased through a commercial bank or with a private gold company. Banks will actually buy gold for you and store it in their vault. If your bank is storing your gold, be sure it has your name on the title and not your banks name on the title. If the bank ever declared bankruptcy, they will not be able to touch your gold if it has your name on it.

Gold is an excellent way to prepare for the future and to protect your family from financial crisis. It is easy to start with small gold investments and build them up over time. Just purchasing one gold bullion cube is worth about $850 right now and is on the rise. Start buying gold to form the base of your investment portfolio and hang onto it unlike stocks that you trade. If you are in your 20's you can buy one gold bullion cube a year and by the time you hit retirement you could have $40,000 or more in gold investments. This money will help out during a time when you have a financial crisis like a healthcare problem or you lose your job.

Gold stocks and gold derivatives are excellent investments for those investors that are willing to take on risk. Individuals that invest in gold stocks and gold derivatives typically have a much higher return ratio, but a much higher risk than those that invest in gold bullion coins. During times of war, bank failure, or negative interest rates, gold investments are considerably higher. In the 1930's, inflation was so high that dollar bills were worth less than firewood so people were actually burning money. When the real estate market declines and interest rates lower; the demand for gold investment increases because of the risk of inflation. People are always fearful of war because they feel their investments and property could be seized at any time and paper money will become worthless. Investing in gold during these times a wise idea because it is a solid asset which can be used anywhere in the world to buy food, shelter, or transportation. Investors commonly buy gold to hide their wealth from tax authorities and to protect themselves from a national crisis. Gold is considered a store of value unlike a stock that is considered a return on value.