|
|
 |
| Homepage
> Wealth > |
Gold
Investing for Profits |
Tradionally, many investors shunt gold and
invest in equities or fixed income markets. With the price of gold
performing extremely well, a lot of investors are turning their
attention on gold.
The price of gold has topped US$700
recently. Gold has been in a bullish run since 2000. What is the
implication? Will gold continue to rise in the future? Is it time to
invest in Gold now? How to invest in Gold?
The rise in
price of Gold is due to a number of factors. Some of them are listed
below.
1. International tensions and Bad times
During internation tensions and war, gold will always hold it
values. Sometimes, investors trade currency for gold In recent Iran
and US nuclear issues, price of gold was shot up to US$700 in fear
of oil prices rising. US dollars and inflation along with high
federal trade deficit and debt have make investors buying gold to
heged against currency flunctuations.
Though now the price
is fallen slightly, it believe that gold is a good investment tool
to use as a safe haven in time of crisis and bad times.
2.
Supply and Demand Fundamentals
When the price of gold rise,
more investors will buy gold. Since the supply and production of
gold is limited, it will not be able to keep up with the increasing
demand from the market. This will make the price of gold rally
further.
3. Stock Market Bearish vs Gold Market Bullish
Gold always perform opposite of stock market historically. When
stock markets are performing badly lately, gold markets were
bullish. With uncertain economic and global conditions, some analyst
believe that gold will further appreciate its value and continued
its bullish run for long term.
It is never too late to
invet in gold now!
There are a few ways to invest in gold
which are shown below.
1. Gold Jewelery
Gold
jewelery is a popular means of investing as savings in developing
countries like India and Middle East.
2. Gold Bullion and
Coins
Gold Bullion are gold bars in 1g to 400g. Goid coins
are legal tendar of issuing countries and usually sell at a small
premium above current spot gold price. Popular investment grade
coins are US Eagle, Canadian Maple Leaf,
3. Gold
Certifcates or Accounts
These are ownerships rights to gold
bullion held by a financial instution such as a central bank for
safe keeping.
4. Gold Mining Stocks
These are
stocks of gold mining and exploration companies. When price of gold
rises, some mining stocks offer handsome dividends when the issuing
companies profits.
5. Gold Mutual Funds
These are
funds that have gold in the portfolio managed by professional fund
managers. Some funds are region specific (such as US) or spread
across different mining companies.
No matter what kind of
instruments you choose to invest in, you have to mix your portfolio
with the right proportion with your equities. The strategy to
investin gold is to have balance portfolio with diversification. The
objective is to use gold as a hedge against flunctuations in fixed
income market. The best strategy is to start with 10 % level of your
portfolio to invest in gold and slowly varies you level of gold to
increase your portfolio stability.
|
|
|
|
