Investing in gold as the perfect hedge investment does not just give you the benefit of diversification from other investments. It also gives you a way to ensure that you don’t lose your shirt in case there is a disaster. While there are certainly times when you would want to cash in on the market, you should realize that even the best managed futures or option plans can go bad at any time. If you want to ensure that you will be able to ride out any crisis or market turbulence, investing in gold is a good idea. The following are some reasons why gold as the perfect hedge investment should be a part of your overall stock and bond portfolio:
Gold is steady and it is quite easy to mine. This makes it one of the easiest precious metals to mine. Unlike oil, gold as the perfect hedge investment does not need much investment capital to get started. Just a few tons of gold pieces and the process of mining will start. You do not even need to invest in high-tech machinery to extract the metal.
Gold does not have to be stored for years. It is easy to store it on a safe place inside your house. If you own gold jewelry, you can simply keep it in a safety deposit box and keep the insurance company happy. The same thing applies if you want to hold an old gold coin. You can keep it in a safety box and keep it insured – all you need to do is take care of it.
Gold as the hedge fund is not only popular with conservative investors. There are plenty of stocks and bonds that pay a healthy return in the short term, but they are very high risk investments. Gold, on the other hand, is a stable investment that pays high dividends – even during bear markets.
The demand for gold is so high these days that gold and silver coins are selling at mint prices. Investing in gold has also become more popular due to the rise of currencies that are based on gold – such as the Swiss franc (Francise), New Zealand dollar (NZD) and the Canadian dollar (CAD). All of these currencies trade on the Global Market and are influenced by everything from oil prices to politics – which makes investing in gold a perfect hedge fund’s strategy.
As gold is a popular investment vehicle, there are many different strategies for choosing the perfect hedge funds. You can choose a bullion fund that invests in physical gold (i.e. bars or coins), stocks or bonds, or you can invest in derivatives.
A popular type of hedge funds is one that focuses on gold, often through ETFs (Internet-exchange traded funds). An ETF generally tracks the movements of an underlying index of commodity. Popular ETFs includes the Gold Minus Drop, or GQD, which tracks prices of gold as they drop in price on a regular basis. These funds are ideal if you want to speculate on the movements of gold – whether it’s increasing or decreasing – without owning physical gold.
Another type of popular hedge funds is those that focus on “paper” gold. Paper gold is just that: certificates of currency or bills that show a certain amount of gold as being held by a custodian. While this type of fund typically does not offer any actual tangible gold, it can be used as a sort of insurance against inflation. In times of economic doubt, paper backed securities give investors a way to maintain their standard of living even during times of financial crisis.
TradingGator is a trading review website where you can read about everything from CFD signals to the best European forex brokers. Find the top trading platforms and courses to become lazer sharp in your execution. We even cover the best forex affiliate programs and show you step-by-step how to get started. TradingGator - For Traders, By Traders!