Is Gold A Good Investment?
I wish i could give you a straight ‘yes or no’ answer, but it’s never that clear cut, even with the ‘safest’ of investment strategies.
I mean, how safe is safe? What i’m getting at is; we all have differing risk tolerances. It’s all relative. That said, as far as investment sectors are concerned, it is safer than most. And a lot of that comes down to it’s history.
The allure of gold, has been with mankind for millennia and due to it’s beauty & rarity, was no doubt a must have status symbol long before records began. At some point it became a recognized store of value and has been used in exchange for goods & services ever since.
Here’s the thing: you know where you stand with gold. It has form, it has real history, it is the ultimate ‘trusted’ safe haven, and that’s why in times of economic uncertainty such as now, demand and value grows.
There’s plenty of gold investment advice that says it makes sense for every investor to have the insurance policy of holding some of their portfolio in gold. But right now, it’s also a time for the canny investor to ‘make hay while the sun shines’ and begin to make a solid gold investment plan.
It’s widely accepted investment advice, that all diversified portfolios should include at least some gold. ‘Experts’ tend to recommend anywhere from 5-20%, but the consensus seems to be that 10% is a sensible minimum to invest in gold or other precious metals – the idea being that this will offset the devaluation of your overall capital base against inflation, should it arise.
Ten Reasons To Invest In Gold
Reason 1: Supply & Demand
Unlike fiat currencies (which are just IOU’s without the backing of any tangible assets) gold’s value cannot be controlled by governments or any other entity. Gold’s value works on good old fashioned supply and demand and there is currently limited supply and plenty of demand.
Reason 2: Debt
Government debt is now reaching epidemic proportions – the U.S. has seen an increase in it’s debt burden of 3000% since the Seventies and it’s only heading in one direction (that’s up btw). Many Western economies now have to borrow, just to pay the interest on existing debt (which sounds like a ponzi scheme to me). This cannot continue indefinitely, without serious erosion to fiat currencies or complete collapse of the financial system.
Reason 3: Money Printing
Governments print more money to pay off their debt and encourage inflation to bring down the debt burden in real terms. Those who save are punished, as their spending power depletes. Trust in governments and currencies erode and people inevitably turn to more tangible assets that will retain value.
That’s what happened in the Seventies and that’s why more and more ordinary Joe’s are currently seeking information on the best gold investment options.
Hence, many of us are now quite rightly interested in:
Reason 4: Gold Price Trend
The gold price trend has been on an upward tear, with a 19% average annual gain since 2001 and the dire economic climate, government debt issues and inflation show no signs of being resolved anytime soon.
Reason 5: Finite Supply
Gold has limited supply, it cannot be printed or produced out of thin air. Unless someone discovers the art of alchemy – that is not likely to change anytime soon.
Output of gold mining companies peaked back in 2002 and demand has only grown ever since.
Reason 6: Liquidity
When compared to other hard asset investment options, such as real estate or rare art, gold is a relatively liquid commodity. Certain gold investment options, such as a gold funds or buying gold online (through a gold broker such as Gold Money or Bullion Vault), provide a convenient means to sell very quickly if you need to.
Reason 7: Booming Population
Massive population growth and increase in living standards in Asia (where they L-O-V-E gold), means demand (& by default the rising gold price trend) led by India & China is only set to increase in the coming years.
Reason 8: Raging Bull
In the past, major bull markets (such as real estate & the stock market) have run for decades. In the 1970’s during similar economic conditions, gold prices rose from $35 to $870 (2485%). The current gold bull market began in 2001 and gold prices to date have have not yet reached this stage.
The last quarter of a bull market is usually signalled by a ‘euphoric’ period, when the greatest gains are made. Remember real estate in 2006? It’s all over the mainstream media, everyone is talking about it at dinner parties and your gardener wants to get onboard?
Reason 9: Bank Buying
After years of selling off their gold assets, central banks have now begun buying gold on the world gold markets again, with the world’s fastest and largest growing economies of India & China leading the way.
Reason 10: ?
Ok, so there are at least nine solid reasons to invest in gold. Number ten? Well, it’s just so darn shiny and pretty ain’t it?
And Finally…
You could leave it there, but my argument is far from balanced. Despite appearances – gold is not at this time universally accepted or loved. Truth is, there is no clear cut answer, so you might want to check some of counter-arguments on the following page: Should I Invest In Gold?
Invest Well!
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