How to Invest in Gold

Buy gold? Why? I don’t really think the world will end soon and only hard assets like gold, silver or diamonds will be the only viable money. Or do I? Things were stable two years ago. Perhaps no longer. Some folks do nevertheless so they buy gold believing in a doomsday scenario. The collapse of our society is just around the corner like the depression times. What about the rest of us? Do we need some gold in our portfolio?

Many financial experts say yes. We need at least some gold or silver. Up to 5%of your portfolio is the norm recommended. Now a day, some say 10 to 25%. Doomsayers aside, gold is good to hold theoretically because it is not directly correlated to the stock markets. So if the markets fall, gold may rise or remain stable. It can provide protection against a falling dollar and as a hedge against inflation. But gold and silver can be very volatile commodities to invest in. In addition, unlike stocks that pay dividends, the precious metals pay no income and actually cost you to store. Remember, inflation is our biggest enemy to successful investing long term (of course, we assume we make some right choices of where to put our money).

So, I have decided I want some gold. I decide how much of my portfolio should be in gold. What do I do now? It depends on how you want to hold your gold. You can buy gold in any of several ETF’s that buy and hold gold and silver bullion. As gold and silver go up or down, you profit or lose value. Two examples are: SPDR Gold Trust (symbol: GLD) and I shares Come Gold Trust (symbol: IAU). Advantages here are that you buy or sell on line if you want. It is a very convenient and easy trade. You can also buy gold mine company shares as a play on gold realizing they are not always correlated 100%.

You can also buy your own bullion as a coin or as bricks or slabs. Go to a coin shop and buy gold or silver as coins or in 1-100 ounce slabs. You pay a charge for this over the spot price of the metal. Also, be careful of coins as they are also graded for collectors and this can affect the cost. You really just want the bullion so buy US Eagles or other country gold coins like Maple Leaf, Kruger and so on.

Finally, you can buy jewelry. Buy rings, or gold chains for your wrist or neck. You get gold as an investment and something beautiful to wear. And you can sell quickly if you need to convert it to cash.