Investing in gold isn’t just a good way to earn a profit in the long-term; it’s an excellent way to protect profits that you’ve already earned through other endeavors. For years financial advisors and fund managers have known the wisdom of securing a portion of a portfolio with instruments that are backed precious metals. Yes, it is true that gold typically becomes more valuable in times of economic uncertainty. But, more importantly, it has a tendency to retain a steadily increasing value, and it will always retain some level of monetary use.
Fending Off Inflation
If the value of the dollar continues to decline, and it probably will, inflation rates will continue to rise. As inflation rises your money becomes worth less every year. If you can buy something for $100 today, you might need $200 to purchase the same item ten years from now. On the other hand, if you buy an ounce of gold today, in ten years you’ll still have an ounce of gold, and according to most analysts, the price of gold will probably have doubled by then. In fact, when adjusting for inflation many believe that gold could peak at as high as $15,000 per ounce at some point between 2013 and 2020.
Mining Company Stock
A good way to indirectly capitalize on the profitability of gold is to invest in mining company stocks. The logic is simple, yet convincing – gold mining companies make strategic decisions to ensure the growth and sustainability of their company, which is based primarily on the ever-rising demand for gold. By investing in gold mining stock you hedge your bets on a corporation who is making well-informed decisions to continue providing their customers and shareholders with a satisfactory service. Mining stocks can also provide a form of steady dividend income, and their value tends to be even less volatile than gold prices.
Exchange Traded Funds
Exchange traded funds (ETFs) are simply pools of investors who combine their monetary resources under the guidance of professional fund managers who are trained to make the right decisions in order to maintain a minimal return for their clients. By committing a portion of your portfolio to ETFs you can eliminate the hassle of conducting research and monitoring market conditions before every gold investment. Instead, you simple devote a set budget to the fund and watch as it works on your behalf to protect your assets through various instruments.