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Knowing The Basics of Gold Investments

A Guest Post from Crystal –

Gold Investments are traditionally considered a diversification of one’s asset portfolio and as protection from the risk of loss versus other investment options, although investing in gold can be a solid financial undertaking on its own. However, just like any financial decision, this calls for careful consideration and background checks to say the least. There are many options to invest in gold and as Forbes.com puts it, “Investing part of your portfolio in the yellow metal is one thing, deciding how is quite another.”

In the article “The Pros and Cons of Investing in Gold” by Marcie Geffner, she quotes Chris Hyzy, chief investment officer at U.S. Trust, the private wealth management arm of Bank of America in New York, saying “gold shouldn’t be considered an investment. Rather, the precious metal acts as a hedge, or a way to try to protect wealth against the risk of loss in such asset classes as real estate, equities and bonds.”


Hyzy continues to explain that “it’s important to think like a central banker. The more growth comes from areas of the world that have high savings, the more (the price of) gold is likely to continue to rise because those savings need to be put to work in non-dollar instruments, including gold and other hard assets.”

On the other hand, the internet provides information regarding investing in the precious metal, for as long as you know how to assess proper and verified advice. Choosing to invest in or buy gold at BullionVault and in similar sites has become a choice of many investors. What should always be put in mind before going into such financial undertaking is to arm yourself with basic information and a background check of the firm you are dealing with, whether it be online or a “brick and mortar” establishment.

Marcie Geffner of BankRate.com highlights, “Gold prices can be quite volatile.” As Geffner quotes Frank Holmes, CEO and chief investment officer at U.S. Global Investors, a San Antonio-based investment fund, he says “70 percent of the time, it’s a ‘nonevent’ for the price of gold to rise or fall 15 percent in a 12-month period. In other words, investors can expect annual price swings of that magnitude or more much of the time. Gold stocks can experience even greater volatility than futures.”

On their website Consumer.FTC.com, The Federal Trade Commission (FTC), the nation’s consumer protection agency, says, “if you are interested in buying gold, do some digging before investing. Some gold promoters don’t deliver what they promise, and may push people into an investment that isn’t right for them.”

The FTC offers the types of gold investments that you can choose from as gold comes in a variety of forms:

  • Gold Stocks and Funds – It can either be buying into a mutual fund invested in physical bullion gold or an investment in a mining firm’s stocks. Forbes.com also offers this as one of four options in investing in gold. The FTC reminds, “Gold stocks and funds should only be purchased from licensed commodity brokers.”
  • Bullion and Bullion Coins – defined by the FTC as “a bulk quantity of precious metal, usually gold, platinum, or silver, assessed by weight and typically cast as ingots or bars.”
  • Collectible Coins – processed gold that have historic or aesthetic value. FTC notes, “Most collectible coins have a market value that exceeds their face value or their metal content. This collectible value is often called numismatic value. The coin dealers who sell collectible coins often have valuable coins graded by professional services, but grading can be subjective.”

The Consumer Protection Agency also provides for constant facts about gold that you would need to know:
1. Gold prices fluctuate. There are no assurances that values will increase or just be maintained.
2. “The prices coin dealers, banks, brokerage firms, and precious metals dealers charge for gold products, like bullion and coins, are almost always higher than the value of the gold the products contain,” FTC advises. Compare prices.
3. There is no existing federal law or Treasury Department regulation ordering any type of confiscation of gold.

In any endeavor, always do your research. FTC puts it simply, “Investigate Before You Invest”.

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