Riding The Gold Boom

There are several economical and historical arguments that would suggest that gold could be on a long term bull run. Consider these startling facts:

• Right now the U.S. government is desperately trying to fight deflation (lower prices) and it has categorically stated that it will look to prevent this at any cost. The long and short of this is that more “paper money” becomes available while the amount of gold stays constant. The bottom line is that this should lead to an increase in the price for gold.

• Traditionally, gold has always performed strongly during times of uncertainty. With the long running war on terrorism seemingly having no end in sight & several global regions of instability, the amount of paper money needed to pay for conflicts/wars/rebuilding etc rises. This huge increase in paper money will only continue to peg up the gold prices.

• There have been times in history when the growth of gold as an investment has shown close to 1% returns on investment on a daily basis. Gold prices in the 1960’s returned average annual gains of 100%. Between 1976 and 1980 gold prices returned (averages of) 300% per year.

Different Ways Of Owning Gold

Gold Stocks & Investment Funds

The obvious ways of gold ownership is through owning a mining stock or fund that invests heavily in gold. Just remember that evaluating & selecting gold mining stocks requires a very different approach than traditional stock picking methods. Here are a few key factors to keep in mind:
• Always choose companies that are being run by an experienced management team.
• Choose stocks that have a high net asset value. This gives a certain level of security should any problems arise.
• Check that the company has a good amount of cash to fund it’s projects & operations

For a more comprehensive review on picking gold stocks and funds that are most likely to perform well take a look at this article.

Buying Gold Coins

Another covert way of exposing your portfolio to gold is by purchasing certain types of gold coins. Many such coins are also collectibles and so offer a double benefit. However, investing in gold coins is a tricky process and you must be aware of the following:

• You must be certain that you’re buying genuine gold coins that have been evaluated and graded.
• Certain types of gold coins are far better investments than others. Some research can easily show you which coins are better from an investment viewpoint.
• There are many different avenues to obtain gold coins. Specialist dealers are a good starting point. Before going ahead with a particular coin dealer find out how long the dealer has been around for and what his reputation within the coin dealing community is like. The sites below list some authorized coin dealers:

http://www.pcgs.com
http://www.pngdealers.com
It’s also possible to pick up gold coins through other sources such as rare coin trade shows and even eBay!

Buying Gold Bars

Buying solid gold bars might be something you think only happens in certain types of movies, but in fact some investors do buy up gold bars. Gold bars are available in different sizes and can even have different finishes. Obviously, the bigger the bar the more you pay overall…but the unit costs can actually be cheaper when you buy bigger bars.

You can obtain gold bars from special dealers who will provide a certificate of authenticity. The gold bar should be 99.99% pure and come sealed in plastic. As with coins, you can also obtain gold bars from eBay but this can be somewhat trickier than buying coins here. Gold bars are fairly simple to both buy and sell and so can form a good vehicle to own gold.

Gold Futures & Options

Experienced traders & investors may wish to consider using futures & options as a way of making swift gains from the price of gold. This type of trading can be risky unless you know what you are doing.

Gold Certificates

It’s possible to purchase a gold certificate that marks you as the owner of bullion stock that is held by an institution. It’s a little known way of holding and benefiting from a bullish gold market without the hassle of stock/fund picking. The expenses to be considered are insurance & storage.

Jewelry
While it may not be your typical financial investment, gold jewelry is still a form of gold (and in some countries is used as a means of saving & accumulating wealth).

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