Is Gold a Good Investment?

As everyone already knows there are a number of different things that are high profile items to invest in, like oil and gold. One day they are at record lows and the next the cost is through the roof. People often wonder when it is best to invest in either of these two mega industries but for this article I will focus solely on gold. When considering investing in gold there are a few questions that need to be asked before opening up your portfolio.

1. Why Should I Invest In Gold?

This is the first and possibly most important question when considering the investment in the gold market. Everyone knows that to have a well balanced and successful portfolio one needs to not put all their eggs in one basket and diversify their finances over a healthy number of companies and industries. The purpose of diversifying your portfolio is to protect yourself in the event of a crash within a certain sector of your investments. Keep in mind gold does not work in tandem with stocks. There is often a major difference between the returns that stocks gives and gold yields year in and year out.

In recent events the U.S. dollar has gained some traction is quite strong in regards to other currencies. As the dollar has gone up it has caused gold to fall. If the U.S. dollar were to retreat in value however it can be expected that investors globally will be buying gold. Historically speaking gold has been looked at as a safe investment as many countries hold reserves in their banks.

2. Is Now The Right Time to Invest In Gold?

Every investor is different and has a different threshold of risk vs. reward. That being said investing in gold is mostly a personal feel however being well knowledgeable and following relevant news sources helps lower the risk of the investment. Many investors that invest in assets like gold wait till they have bottomed out or gone negative. Only you and your financial advisor should be deciding whether it is a the proper time to invest in gold.

3. Should I Buy An EFT Instead Of Gold?

Many investors choose to invest their money in EFTs instead of gold due to the low annual expense ratios. EFTs also give the owner the ability to sell the gold immediately if there is a crash or they do not want it anymore. This is a huge plus because the gold can be traded like a stock instead of finding someone to buy your gold.

There are a number of good reasons to invest in EFTs especially if they are heavily traded like SPDR Gold Shares and Market Vectors Gold Miners (GDX) because it enables investors to reduce their risk when investing. Purchasing shares of an EFT within a brokerage account or retirement account is very easy and is something to discuss with your financial advisor.