Since the days of King Midas, gold has been a measure of wealth for individuals, companies, and governments. Men have labored for the precious metal and nations have gone to war over it. Today gold can be purchased in the form of coins, bullion, or bars. Storage and insurance fees may add to the cost however. Plus the metal pays no interest or dividends. There are better ways to buy gold.
Consider buying the precious metal in the form of a gold mining stock, such as Goldcorp or Barrick Gold. For diversity, gold may be purchased in the form of a mutual fund which buys and sells a portfolio of gold mining stocks.
It is not necessary to pay for storing or insuring stocks and mutual funds. Plus, they may even pay dividends. And if the price of gold increases, your stock investments are likely to increase also.
Worldwide gold production has been flat for the past ten years. But today demand is so strong that it is hard to find gold coins, bullion, or bars. As an example, recently in India, consumers have been gobbling up gold in the form of religious icons for the latest Hindu holiday celebrations.
In addition, global governments are injecting trillions into the markets for liquidity. All else equal, this will raise inflation worldwide. Hard assets such as gold historically have increased in price with the increase in inflation.
This is a strong scenario for gold being a profitable investment now. The price of gold was $1000 last March and has fallen to around $750 an ounce today. It could be closer to 2010 when the price of gold appreciates considerably. But putting gold in the form of stocks or mutual funds would likely be a profitable part of your nest egg.
