Investing in gold has always been a popular alternative to putting your money into stocks and shares. The global economic downturn over the last few years has left many investors scared to invest in shares and many have seen gold as the perfect alternative to get a decent return on their money. This increased demand has meant that gold prices have increased dramatically, reaching record highs of $1,900 an ounce in 2011. Investing in gold over the last 10 years will have given you an excellent return, with the price rising from $250 an ounce in 2001 by 660% to reach the highest price in 2011. The price has increased every year since 2002 to achieve a record high price, so the trend in gold prices is very positive, as you can see from the chart below:
If you do have money to invest and you haven’t yet considered investing in gold, you should consider doing so as a great way of introducing diversification into your portfolio. Many investment experts would recommend including an allocation of between 5-15% of gold bullion and gold-related investments in your portfolio. Gold is a particularly great asset to hold in these uncertain times as it is almost guaranteed to hold its value and is perhaps the ultimate low-risk investment. On top of the low-risk, gold prices are forecast to continue to rise for the foreseeable future. The Indian and Chinese central banks have been purchasing gold in vast quantities, with the Indian central bank currently buying around 200 tons of gold bullion every year. Learn more about Where to buy gold on our advice page.
With many online gold dealers now providing an excellent service, investing in gold has never been easier. The best dealers have a wide range of products to invest in, and most will have pictures of their products up so you can seen exactly what you are buying. As well as gold, you can also invest in other precious metals, such as silver, palladium or platinum bullion. Gold can be purchased in various forms, including gold coins from 1/10oz up to 1oz, all the way up to 1kg gold bullion bars. Coins come in different forms depending on their country of origin. The most common gold coin available is the South African Krugerand, with over 1,400 tonnes in circulation. Other common coins include the American Gold Eagle, the UK gold sovereign, the Canadian Maple Leaf and the Chinese Gold Panda. Visit our page on gold coins for more information.
Traditionally, savers considering investing in gold do so for one of two main reasons; gold has long been seen as the ultimate investment during volatile economic times – for this reason it is regarded as a preserver of wealth, as its value does not fluctuate as much as many other investments, especially when times are turbulent. Secondly, gold is often seen as a great way to hedge against the dollar. Given that we are currently experiencing some of the most volatile times in recent economic history, and that the dollar has been struggling amid the financial crisis, it is hardly a coincidence that investors have been rushing to protect their wealth by buying gold. The result of this – the price is going up and up!
Another advantage of investing in gold is that it is an extremely liquid form of investment – there are always people willing to buy or sell gold, so will always be able to buy or sell your gold whenever it suits you. Supply is also an issue – the outputs from gold mining peaked in 2003, and given that there is always a steady demand for gold, this will only result in prices being pushed up further as demand exceeds supply. The price of an ounce of gold at the end of 2011 was around $1,560, and many experts predict that gold will soon achieve record prices of over $2,000 an ounce. Watch this video for why you should consider investing in gold and some of the basics you need to know:
There are various different ways of investing in gold – I will explain these in other pages on this site, or you can explore this more when you find a gold dealer. These include investing in physical gold, where you own an actual physical amount of gold – this can be in various forms and different rules apply to each type, and paper gold, where you invest in companies that operate in the gold production industry, although these have fared worse than the gold price over recent years.
Obviously, if you’ve found this page, you’re already considering investing in gold – as well as being an exciting thing to add to your portfolio, it offers stability and excellent long term returns and should definitely be considered as part of a balanced portfolio. In these current economic times, it is also pretty clear that there has never been a better time to start investing in gold.