Gold Stock Investments – Should You Buy?

Not many people are aware of gold as an investment avenue. Most people think that the best use of this precious metal is in the form of jewelry. Not this is certainly not the case. Most financial experts and investment analysts have the view that gold is one of the best investment avenues and it is certainly a great hedging method against the fluctuations which we see in the stock market now days.

More and more investors are attracted towards gold as an investment because of the rise in gold prices over last few years. Since gold prices are not directly connected with the share market, investing in this precious metal is a great way to diversify your portfolio. If you refer to any asset allocation tool, you would notice that all of them recommend that at least 5% of any portfolio should have some kind of commodity or precious metal. Gold investment fit the bill perfectly there since this is one of the best precious metals to own.

Another good reason to buy this metal is the weakening of US dollar. As seen in the past, the gold prices tend to increase whenever the dollar value decreases. It is a great time to buy gold from European countries since you can buy it for cheap. The investment in this metal is also a great way during high inflation. When the inflation is high, the investors realize that their money is of less value in future therefore they would like to invest is such an avenue which tend to retain the value over a longer period of time.

One more reason why gold is still a good buy is the increase in demand in countries like China and India. Both these countries have seen tremendous increase in demand of gold due to rise of the middle class and upper middle class families. They tend to buy gold during festival seasons a lot. The supply of this metal is not increasing while demand is going up.

In recent times, there are various ways to invest in gold apart from buying traditional jewelry. In fact, jewelry is the least preferred method to buy this metal since it is not easy to sell off and the making charges are not refunded. The best ways to invest in gold are through exchange traded funds and shares of gold mining companies. Exchange traded funds are the best means to buy and sell this metal since these funds mimic the prices of gold in international market and they are very liquid form of investment. Therefore, these can be bought and sold on any working day.