Like many things that are hot and popular to talk about on financial cable news shows and on the internet, you either love gold or you hate gold as an investment. Which camp do you fall into? Is gold a good investment now for you?
For the longest time, I have been telling everyone on my blog and in articles that I’ve written on other sites that I think gold is a terrible investment. But, let me let you in on a little secret. I’ve been secretly buying gold for years while still bad mouthing it the entire time.
Yes, there, I’ve said it. I’m a fraud….sort of.
There Are Plenty Of Reasons You Shouldn’t Buy Gold
There are plenty of reasons that you should not own gold as an investment. If you are just now thinking about buying it, you’ve missed the huge move in gold. It has had an incredible run up over the past couple of years in tandem with the current recession. It hit its 52 week high recently, and the precious metal currently been trading around the $1,700 per ounce level lately.
I absolutely hate buying any investment near its 52 week high price. There doesn’t seem to be much upside left to the investment, and there seems like whole lot of downside. For many people who have not invested yet, it appears that they may have missed the boat.
Another reason that I don’t want to own gold is that it is hard to liquidate. My uncle told me the other day that he purchased gold coins from a company that he saw advertise on late night television. That’s all fine and well if that is what you really want to do with your investment money and pay high fees. But, what happens when you need to sell those coins?
It is going to take a little while to find a buyer who will pay you the full price of your gold coins. And, you can forget about taking them to a pawn shop or jewelry store with a “we buy gold” sign in the front window. They only pay pennies on the dollar for your gold in order to resell it themselves.
Everyone who is a gold bug loves to praise gold as a hedge against inflation. Well, that sounds like a great idea while you are simply buying and selling on irrational fears of a stock market or world collapse. But, the hedge theory starts to fall apart when you actually have to put it into practice. When was the last time we were all out there bartering for things like gas or cable television with gold doubloons?
Even the Greeks are walking around the streets of Athens with solid gold coins in their pockets as a hedge against their country’s impending financial collapse. And, finally, just on principle alone, I’m not buying anything as an investment for my financial future that is sold through infomercials on late night television.
Why I’m Bucking The Trend And Buying Gold
I still hold true to my hatred of gold. I hate anything that has built up so much hype and has spawn so many self-serving vultures that prey on people’s fears. With all that being said and all my excuses, I still own gold in my own investment portfolio. So, why am I such a traitor to the fight against gold bugs?
There are several reasons actually. The biggest reason that I have invested in gold is for the diversification that it offers. Gold’s performance is typically inversely related to the stock market. So, when stocks are zigging, gold is often zagging the opposite way. It evens out the risk of the market’s swings.
Do I think that the stock market is doomed? No way! I’m a bull through and through, but I also have decades before I will reach the ripe old age of retirement. I can wait the market’s downturns out because I truly believe that the markets will continue to move higher over the very long-term. Do I know when things will turn around? Of course I don’t.
But, I feel confident that the market will eventually head higher and continue to do so over the long-term. Until then, I love having a portion of my investments that are heading higher while I wait.
Where To Buy Gold
There are so many ways that you can purchase gold as an investment, and almost always the best sources do not come from your television set, the other end of a phone call, or an instructional DVD a company sends you. You don’t need to buy an overpriced system to invest in gold.
There are several great exchange traded funds (ETFs) and mutual funds that focus on gold and other precious metals. I will always choose a great, professionally run mutual fund that specializes, lives, and breaths gold, gold miners, gold refiners, and other gold related companies over buying gold bullion and coins to stash under my bed every day of the week and twice on Sunday.
Gold can be a great investment as a small percentage of your total investment portfolio, such as limiting your investment to 5% to 10% of your total nest egg. That will help you diversify and wait out the market turmoil. But, you also have to be smart when purchasing gold and other precious metals about where you buy them from and how the investment is structured.
What about you? Do you have any gold bars hidden under your bed or in the closet in case the world ends? Do you secretly drool over those late night infomercials on television praising gold’s benefits? I’d love to hear your experiences with buying gold.