Practical Gold Investments

Practical Gold
Investments
By www.ProfitableInvestingTips.com

http://profitableinvestingtips.com/profitable-investing-tips/practical-gold-investments
December 2018 was a tough month
for the stock market.

In fact, the S&P 500 started falling
in October of 2018.

An aging bull market, a trade war
that could be long term, higher
interest rates, and falling profits are
all indicators that the long run up in
stock prices is over.

When a bear market is on the
horizon, one of the options for an
investor is to take profits from
stocks and look for some practical
gold investments.

The key here is the word
“practical.”

There are inefficient and difficult
ways to invest in gold and then
there are practical gold investments.

Here are some thoughts on why and
then how to invest in gold.

Why Invest in Gold?

A true “gold bug” believes that in
the end all paper (fiat) currencies
will become worthless and that gold
will hold its value.

These folks buy gold bullion with
the intention of holding it forever.

Others jump on the bandwagon
when gold is going up in price, only
to sell when the price of gold
corrects.

Why you would want to invest in
gold can vary and depending on
your reason there may be different
practical gold investments for you.

Investopedia writes about 8
reasons to own gold. Here are their
8 reasons.

1. Gold holds its purchasing
power over the decades and
centuries.
2. When the dollar weakens gold
bugs believe that process will
continue and they buy gold.

3. Gold is seen as a hedge against
inflation.
4. The purchasing power of gold
also rises during periods of
deflation such as the Great
Depression.

5. Gold is a refuge during periods
of geopolitical crises.
6. New gold supply is dependent
on new mines dug deeper and
deeper so there are supply
concerns.

7. Gold goes up when the stocks
and the dollar go down so it is a
way to hedge risk in stocks and
cash positions.
8. The combination of all the
above factors makes gold a
good (but limited) part of any
investment portfolio.

Your reasons for buying gold will
determine what to buy, how long to
hold, and other factors.

Thus practical gold investments for
one investor will differ from the
practical gold investments of
another.

Practical Gold
Investments

Gold Bullion

Let’s assume that you are a true
“gold bug” and believe that the
only thing that will hold its value
over the decades and centuries is
gold.

You will probably want to buy gold
bullion.

Years ago we wrote about how to
buy gold for investment.

We wrote about buying gold bullion
at that time.

The issue with gold bullion is
storing it in a secure place.

If you periodically buy a few gold
coins from the US mint, your bank
safe deposit box will do just fine.

If you are routinely buying 12.4
kilogram “Good Delivery” gold
bars, you will quickly need more
safety deposit boxes or will need to
pay to have your gold stored in a
secure vault.

If you want to sell any of your gold
you will need to have it removed
from storage and shipped to the
buyer. This is an extra cost.

And, while your gold is sitting there
during a stock market rally, it is not
appreciating in value or gaining
interest.

Gold bullion is an ultimate hedge
against societal and economic
collapse but is commonly not a
good investment.

We wrote that you might want
to avoid gold as an investment
back in 2012 when the price was
peaking.

In that article we noted the increase
in gold prices in the 1970s and the
fall of gold prices in the early
1980s.

It might be noted that while the
price of gold was $1,700 an ounce
when we wrote that article, it is
$1,290 today!

Folks who sold their gold in 2012
and bought an S&P 500 index fund
did just fine, thank you very much.

Flexible and Practical Gold
Investments

The best time to buy gold is when
nobody else wants the shiny stuff
and the best time to sell is when the
whole world cannot buy enough.

Buying and selling gold, instead of
buying and storing it, requires
flexibility.

You can get this with an ETF
(exchange traded fund) that tracks
the price of gold bullion.

We wrote about Gold ETFs in our
article How to Make Money in
Gold Investments.

The good parts of holding shares of
a Gold ETF are that you are not
paying to store your gold and
buying or selling does not require
you to take or give up physical
possession.

You can buy and sell your Gold
ETF shares just like you would a
common stock.

And, speaking of stocks, there are
gold mining stocks as well.

A gold mining company that is well
run will make money whether the
price of gold is high or low.

The price of the stock will be lower
when gold is low and higher when
gold is high.

But, the price effect is multiplied
with gold mining stocks.

When the price of gold starts to go
up, the price of a well-chosen gold
mining stock will go up faster.

When the price of gold starts to fall,
gold mining stocks lose value faster
than gold itself.

Both gold ETFs and gold mining
stocks can be bought and sold
rather easily and do not require a
secure storage like gold bullion.

These facts make them practical
gold investments over time from
important to individual retail
investors.

Hedging Investment Risk
with Gold

Many investment advisers
recommend that gold be a small
portion of any well-balance
investment portfolio.

If you choose to follow their
advice, there are practical gold
investments and impractical ones.

You can as easily hedge risk in your
portfolio with a gold mining stock
or gold ETF as with gold bullion.

And there is a lot less fuss and
bother when you own shares
instead of having gold bars costing
you money for secure storage.

Practical Gold Investments

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