Thursday, March 13, 2008

Why invest in gold and the many ways to invest in Gold

The price of gold itself is up over 50% from its lows in 1999. Graded gold coins are up 70% in the last three years. Futures and options on gold have soared. Who knows how many thousands of percent you'd have made by investing in gold?
There are many major factors that make gold a great investment right now. Gold is still cheap, while stocks are expensive. In January of 1980, both the Dow Industrials and the price of gold were at the same level: 800. Now, nearly 24 years later, the Dow is near 10,000, while gold is less than half its January 1980 value. There are some great opportunities in gold stocks.
Governments will make our money worth less to pay off their record debts. Governments can print money to pay off their debts. But they can't create gold. The supply of paper money can be infinite. But the supply of gold is extremely limited (they say that the entire gold production in the history of the world could fit on the basketball court.
Gold should do well in extreme bear markets. Silver more than doubled in value from 1932 to 1936 during the Great Depression (the price of gold was fixed by the government). The next long bear market was 1968-1980. Silver rose from around $2 in 1968 to a peak near $50 in 1980.

Gold stock will rise during inflation... and during deflation. Investing in gold is good inflation protection... gold rises as the value of the dollar falls. As the government lowers interest rates significantly and wildly prints money (creating inflation) to offset that deflation... leading to substantially higher gold prices. This is where we are now, and gold has done what it's supposed to do.
When you buy gold, you lower risk in your investment portfolio. In the past, gold has tended to do the opposite of stocks...it skyrocketed in the 1970s, when stocks did horribly. Then in the 1980s and 1990s, when stocks soared, gold lost over half its value. Now in the new millennium gold has soared while stocks are still below their year 2000 highs I consider these to be the best opportunity right now. While gold stocks are up nearly 500%, investment grade gold coin investment (those that carry a grading of Mint State (MS) 63 or higher from the grading agencies PCGS or NGC) are 'only' up 70%. These coins peaked in value in 1989. They subsequently fell by 85%, bottoming in 2001. There is still 100% upside on the table here, and your downside is limited (since you're close to meltdown value).
To own gold directly, you can buy common gold coins or small bars of gold. Common gold coins are known as 'bullion' coins. These include popular coins like Krugerrands or Canadian Maple Leafs, and they cost just a few dollars more than the current price of gold. These don't have extraordinary upside or downside, they simply move with the price of gold.
Are you ready to invest in precious metals? Coins and bars bullions are the choice of any smart investor under the current financial circumstances of world economics. While the paper dollar is still devaluating, your gold investment will only increase in value. Reputable sellers online can provide direct access for your immediate investments in precious metals such as gold bars.

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Source: http://www.articlemonk.com/Article/Why-invest-in-gold-and-the-many-ways-to-invest-in-Gold/19003
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