Gold is perhaps one of the most useful assets on the market today. It is a safe-haven asset, and while it can be a little volatile, its movement is not usually in line with equities or with property assets - it is a commodity for which there will always be demand, which makes it a great investment option.
There are a few different ways of investing in gold - you can invest in physical gold or you can invest in a fund that tracks the value of the commodity. It is a good idea, in the long term, to hold some physical gold because it is considered to be a universal, finite currency. If the currency market bottomed out, gold would still have value in relation to the new value of the currency. Gold, in its physical form, is a good form of wealth protection. Funds that track the value of gold, on the other hand, are a good investment - but you are holding a virtual asset - an agreement - rather than something that is solid.
How Much to Buy
With a lot of investment schemes, people are encouraged to start small, reinvest their profits, and keep trading over and over again. You may trade shares many times per day, buying low and selling high (as the saying goes). It would be expensive and counterproductive to do this with physical gold since the buy and sell prices can show extreme variations, and there other fees to worry about (especially if you are buying bullion bars). Investment-grade, legal tender coins that are made from gold sell at a premium to the gold spot price too, so you would have to wait a while to see a profit.
For this reason, if you're going to buy gold as an investment, it's a good idea to pick up as much as you can. Starting with a modest amount is counter-productive. You will see better returns if you track the markets for a while, wait until you can get a good price, and then purchase your gold as an "insurance policy".
Small coins make nice gifts, and you can buy investment-grade gold as an investment in the EU and the UK without having to pay VAT or Stamp Duty, so take advantage of this. If you want an investment that you can micromanage a bit more, where you can buy small amounts at a time and gradually build up your portfolio, look to equities or a fund that tracks the value of a commodity such as Gold (or Silver). If you're looking to build up a portfolio and will be putting a certain percentage of your disposable income towards the investment each month, then gold is an option, but don't sell the gold that you hold unless you really need to do so. Think of gold as being like property - only let it go if the benefits of doing so significantly outweigh the value of the asset that you are giving up.
About the Author
Brooks Allisen has had a successful career buying and selling gold and precious metal stocks and options for more than 15 years. This up and coming author discussing the six types of gold investors also has a popular website and provides valuable information about investing in gold. To learn more, visit buygold.mywebpal.com.
