Advice On Investing In Gold

by skorg

posted on 05/15/2009

It is always a good idea to read all the Investing lessons in order to get the maximum benefit.
Lesson 1: Basics of Investing - http://www.advice.com/latest/article/2009/05/11/Advice+on+Understanding+the+Basics+of+Investing
Lesson 2: Beginning to Invest - http://www.advice.com/latest/article/2009/05/12/Advice+on+Beginning+to+Invest
Lesson 3: Mutual Funds - http://www.advice.com/latest/article/2009/05/13/Advice+on+Mutual+Funds

Gold is not new to us. Come marriage and in many countries there is still the shameless talk of gold for dowry while some others have some auspicious day to buy gold. The shining yellow metal has attracted humans a lot and there are good reasons for that. Gold has always been equated to the status symbol. It does not get rusted or for that matter loses its shine. It is extremely ductile and can be easily converted to another form (jewelery). All along man has hunted gold almost passionately and we have heard enough stories about those who have triumphed and those that lay down their lives running after this elusive yellow metal.

Well we can go on like this and a chemist can give much more information like its symbol (Au) and what not. But let us focus our attention to its investment oriented features. Gold can be readily converted to money (sell/pawn). But the best feature is that it is a good hedge against inflation and it does not lose its value as the years go by, like an idle cash does. It is also accepted throughout the world akin to currency. But it also does not generate returns (Two gold coins does not give birth to another one).

Gold is available in electronic form through Gold ETF (Exchange traded funds). These funds make investing in gold a breeze compared to having to physically buy and keep it safe. But there is a catch. You have fees associated with this approach. But there is a another often overlooked danger. Having gold in physical form gives us a sense of security during extremely bad times. When there is a sudden collapse in the economic system, having pure solid gold with us means we are still in the game and gold not only holds its value better but also is accepted globally. So you might even be able to settle down somewhere else with ease. Not a probably event but in these times not impossible too.

So what then. Diversification is the key. Have some amount of your money in gold. Of course if you are buying jewelery then your wife should be very happy about it. But we are not talking about jewelery. We are talking of pure gold. Jewelery gold may not be pure and also we need to face loss in the form of 'Making charges' and 'Losses while the jewel is made'. When we resell, the person buying it may again ask for losses as he will have to recast the jewel to some new model. So it is loss all the way. Instead we need to buy gold (coins or bars) from reputed sellers, where you get a nicely packed gold coin along with its purity certificate. It is available in 5g / 8g / 10g. So next time, gift your wife a beautiful gold coin. And you can be happy that you have invested in gold too.

Thanks for the feedback on the articles. The next in the sequence would be 'Real Estate'.

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