Gold Investment Consumers Guide - Investment

Anyone following financial market had to notice how assets of all classes have been suffering lately. Stock indexes are far from any meaningful rally, bond market is in disarray, and housing prices seem not to be able to find the floor yet.

But there is an exception, and that exception is gold whose price has been steadily climbing during the last two years. Number of reasons exists why this is happening, and before you decide if you should consider gold, you may take a look at it all.

First of all, big and small investors alike have been already investing in gold as a way to protect themselves against losses in other asset classes. Unlike stocks or bonds, they know that they will always have it no matter what happens elsewhere.Another big reason why the price of gold is steadily going up is because central banks are continuing to buy gold to diversify and solidify their holdings. This is especially true for central banks in emerging markets that normally hold all their holdings in dollar denominated assets like government bonds. So just in the first 8 months of this year, their purchases have risen over 150 % over those in 2010.

Even European central banks have started to be net purchasers of gold, first time this has happened since 1986. And this is a trend that shows no tendencies of slowing down or stopping bringing on further pressure for gold prices to continue going up.

So then, if gold has such firm support and promising future, what are the best ways to invest in it? One of them is to buy shares in gold mining companies. This can be done by purchasing them directly through your broker or through investing in a mutual fund that specializes in gold mining companies. Investors here hope to make money as prices of those shares go up and as companies redistribute their earnings through taxable dividends. However, it is very important to note here that gold prices and share prices of gold mining firms do not always move in the same direction. Share prices can and do move very violently and, thus, they can be very risky. The bottom line here is that you are really not investing in metal, but in the company itself.

Then, there is the most tangible way to do gold investment, and that is by purchasing gold itself. The most rational way to go about it, and the cheapest one at the same time, is to purchase bullion coins. There are many choices here, and many coins are industry standardized - they are widely accepted and even traded.

Many may consider jewelry as an alternative to gold coins, which is really not a great idea as the premium paid on purchasing jewelry is multiple of a small premium paid on purchasing coins, and that steep premium cannot be recuperated if it is ever offered to be sold.So, whatever you do, plan well, and plan well ahead, and let a shiny metal show you the way.

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