If you're concerned about inflation and other calamities, gold can offer you a safe haven for investing. Although in the short term it can be as volatile as stocks, in the very long term, gold has maintained its value remarkably well. Since gold is an alternative commodity, it helps diversify your investment portfolio and, in doing so, provides a solid hedge against inflation. Gold interest rates tend to remain unchanged by inflation because they retain their value longer than other investments backed by dollars.
Gold mining can have a significant impact on the environment and mining practices have raised human rights concerns, as many gold mines are located in areas affected by conflicts. When buying gold jewelry, keep in mind that the price you pay will be linked to the craftsmanship of the piece and that the amount of gold it contains will be only a percentage (carats) of its total weight. And in fact, during financial calamities when investors flee the stock market, gold prices tend to rise. Investing in foreign exchange involves additional special risks, such as credit, interest rate fluctuations, investment risk in derivatives and domestic and foreign inflation rates, which may be volatile and less liquid than other securities and more sensitive to the effect of various economic conditions.
Nicholas Thompson, who manages Morgan Stanley's physical precious metals offering for Wealth Management clients, says there may be other reasons to consider investing in gold right now. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. The justification for the appreciation of the value of gold follows the general logic that QE generates inflation and gold prices generally rise along with inflation. The truth always lies somewhere in between, and in this case, the truth is based on a multitude of factors that cover your investment objectives, your time horizon and, ultimately, your investment strategy.
Gold coins were minted and used as currency as early as 550 BC. C., but gold was known as a sign of wealth long before its use as a currency. Gold futures contracts are agreements between two parties to trade a certain amount of gold at a fixed price at a future time. Buying gold mining stocks is relatively simple, through a brokerage account with an online broker or investment application.
However, you don't have the security of physically owning gold if gold stocks aren't successful. In addition, international investment entails greater risk, as well as greater potential rewards compared to the U. You can also invest in gold by purchasing gold mining stocks, gold futures contracts and gold exchange-traded funds (ETFs). Possession of physical gold entails storage problems, insurance and other costly fees, and gold mining companies can be a speculative investment.