Gold, One of the Safest Ways to Invest

1The precious metals market has always been one of the best ways to invest for virtually every investor.

Gold stands at the head of the precious metals market as the most covered and easiest investment to get into. Here are just a few of the ways that gold can protect and build your wealth.

– There are more ways to invest in gold than many other kinds of securities.

The safe-haven investor is made even more safe because of the many ways that there are to invest in the metal. This ensures a high volume on the metal, and the high volume in turn secures a more stable price for the investments of everyone.

You can invest directly in gold bullion in most countries; however, you will need a professional partner in order to protect your investment from the government. If you do not feel like going through this hassle, then you can invest in many derivatives of gold such as exchange traded funds and mutual funds that include gold. These investments may be slightly off of the true value of gold; the derivative investments tend to be affected by the short term attitudes in the market more than gold bullion direct investments. All of these investments are still safer than other securities because they respond much less to short term movements in the market.

In order to decide between the ways to invest in gold, you should consult a professional financial advisor whom you trust. If you want to protect and build your wealth, then you must be sure that you deal with an investment that is within your budget as well as the one that is right for your portfolio.

– The safe-haven investor invests in gold for the long term.

If you are looking for investment that you can keep for a while without having to monitor it, then gold is definitely the investment for you. Most people do not have the time to look over their investments on a day-to-day basis. However, the only investments that truly make money outside of the precious metals market require a great deal of personal management in order to succeed. You get the best of both worlds when you invest in gold – the safety of a precious metal along with the ability to create wealth for yourself while saving time.

– Gold can maintain your portfolio even when the market is going down.

One of the main reasons that people invest in gold is the ability of the precious metal to maintain value and even go up in value during a bear market or recession. Gold is usually the investment that people look to when the dollar is falling. This means that you can actually reverse some of the negative effects of a recession including higher interest rates and a higher cost of living. Once the recession is over, precious metals tend to retain their value. This means that you do not have to sell your holdings once the recession is over – you can keep them as an addition to your net worth.

As one of the safest ways to invest, gold is quickly becoming a staple in the portfolios of many people. In order to get the most value out of the investment, you should start to invest in the product before people begin to truly understand what gold does. Once the general public is made aware of the true nature of the precious metals market, those people will likely flood the market and drive up the price. If you get in ahead of them, then you will reap the benefits of your good decision without having to pay a premium.

How to Invest in Gold for Inflation Protection

4The four asset classes in a Permanent Portfolio include stocks, bonds, cash and gold. Each asset class hedges against one of the four economic conditions: inflation, deflation, prosperity and recession. We initially invest 25% each into each asset class and then rebalance the whole portfolio when one of the asset classes reaches a 35% or 15% rebalancing trigger. Gold can be a volatile asset in isolation but when its combined with the other asset classes, it has actually helped reduce the volatility of the overall portfolio. We don’t buy gold because we think it will go up in price. We buy gold for the protection it can provide for the savings we can’t afford to lose. You actually need to be agnostic about all four different asset classes in the portfolio; each one serves a well defined purpose and will do better than the others at different unpredictable times.

Gold is our hedge against inflation and an uncertain world. Gold prices react strongly to inflationary pressures, currency devaluations or political upheavals. We only use gold bullion in the Permanent Portfolio not gold mining stocks, other derivatives or commodities. Gold doesn’t earn any income but it can produce capital gains when the other assets in the portfolio don’t. Holding physical gold offshore in a vault and insured is the best way to invest in and hold gold. I also suggest that you purchase and store some one ounce gold coins like the American Eagle or Canadian Gold Maple Leaf in a safe deposit box in a bank close to your home in case of a local emergency.

Gold is the only hard asset that you can include in the portfolio, the rest are just paper assets. You never know what the future will bring, so it’s always comforting to know that you have some assets you can get access to outside of the country you live in. If you don’t live in Australia, that country could be a good location to store gold since they are a stable country and have a great reputation for storing gold for investors. In many situations though it may not be feasible to hold physical gold, like in your retirement account for example or it’s just not convenient for you. In those cases a gold exchange traded fund (ETF) will be your best option. Here are some gold ETFs trading in the USA you may want to explore including their trading symbols:

  • iShares Gold Trust (IAU)
  • Central Gold Trust (GTU)
  • SPDR Gold Trust (GLD)

If you live outside of the USA you should explore similar ETF options.