If you’ve recently become interested in investing in gold, you may be wondering what all the fuss is about. After all, if gold is selling at $1100 an ounce, it has to be worth that much for a reason, right?
Actually, no! Gold is pretty much useless in its utility. Other than jewelry and investments, gold is rarely used. It has no practical value. So then why is it so expensive? Why do governments and banks spend so much time trying to hoard massive amounts of it?
I haven’t been able to find an answer. However, the fact remains that gold today is worth a lot of money. Some people say its going to keep rising, while others say its due for a correction.
Regardless, gold is generally considered to be the “base” of your investment portfolio. Depending on the type of market, you should have between 3-10% of your portfolio devoted to gold. Anything more, and you better hope there’s a nuclear attack, because under no other circumstance do I see the price of gold rising any higher than it is now.
When it comes down to it, investing in gold has the same risks as investing in anything else. Instead of wasting your money on gold, why not buy some real estate? Why not buy something that will help you earn more money?
Gold tends to rise sharply and then stabilize. We’re seeing it stabilize right now, but the next time it moves, which direction will it go? Also, when you invest in stocks, for instance, your money can grow at an exponential rate.
While the growth of gold is theoretically unlimited, the circumstances in which you’d really make a killing in one shot would imply the collapse of the United States. And nobody wants that!
A safer short/medium term strategy would be to become a dealer in bullion coins and start SELLING gold to people. The demand for gold is huge right now and suppliers can’t keep up. If you could find some way to invest in the actual production of gold, such as in a mining company, that would be a bit more thoughtful than investing in the bullion itself (unless you were to sell it retail!).