The stock market is looking very toppy with the market at 14,000. If you sold at the lows of 2008 and waited until now to get mark in, it’s probably too late. With the continuation of record low interest rates, bonds aren’t a valid option either. Real estate seems to have bottomed, but with a large supply of foreclosures and the difficulties in obtaining mortgage money, the housing market can be a dangerous place to park funds. One excellent place to consider putting your money to work, however, is gold.
Why Invest in Gold?
Gold has always had the intrinsic value that paper money does not. When crises occur, the price of gold rises because investors make the traditional flight to safety. There are several situations that can cause the price of gold to rise, and these factors are occurring as we speak.
- The Federal Reserve is creating dollars at an unprecedented rate. The more dollars in circulation, the less each dollar is worth. This is inflation, and gold has always been the best hedge against it.
- The Euro zone crisis has flattened the global economy and it has raised serious doubts about the future of many paper currencies. Uncertainty in the money markets equals a higher gold price.
- The troublemakers of the world like Iran and North Korea are continually threatening to make and/or test and eventually utilize nuclear weapons. Any hint of a crisis sparks a rise in the price of gold.
Isn’t Gold Expensive at $1700 per ounce?
Certainly gold has climbed way past the long-standing $400 per ounce barrier, but $1700 will look cheap as gold moves into the $3500 arena. Supplies of the precious metal have never been plentiful and gold mines today can’t keep up with the demand. Any investors who thought that the stock market was overpriced at 8000 are obviously not happy today.
How Can I Invest in Gold?
You can get into the gold market and it’s not as difficult as you may think.
- You can buy the actual metal and take delivery of gold bars. Of course, these are heavy, unwieldy, expensive to ship and expensive to store.
- You can trade gold futures. If you do this right, you’ll never have to take delivery of the material, but be forewarned, the futures market is no place for amateurs.
- You can purchase stocks of gold companies. This may work, but gold stock prices do not always correlate with the price of gold.
- You can buy a gold ETF. Be careful here, though, because even though ETFs are constructed to track the price of a certain commodity, some fail miserably. Just check out the oil ETF USO, and try to figure out why it trades at $35 when the price of a barrel of crude is near $100.
The Best Way
Savvy gold investors look to actual gold coins as the best place to put their cash. First, gold coins are sought after because of the intrinsic value of the metal. If the price of gold goes up, so do the coins. Secondly, some gold coins are collector’s items and therefore the coins can work for you two ways.
Firms like the U.S. Money Reserve specialize in the sale of gold coins. A simple Google search will help you locate gold coin dealers and the entire transaction process is simple and painless. Anyone with rudimentary knowledge of economics realizes that the forces that cause gold to rise are very active today. Don’t miss your chance to cash in!