Saturday, 5 March 2011

Gold Is Similar To A Hedge Fund

By Jack Wogan


Whenever they want to make a solid investment, most people go for gold. This is because gold acts as a sort of defense in front of a multitude of risks such as market declines, banking failures, credit default and even political turmoil. In addition, this yellow metal has been used for centuries as a means of exchange and as an universal currency, which makes it even more trustworthy.

Gold can be a tremendous weapon in the fight against unwanted economic effects such as inflation. Widely regarded as a looming danger in almost all the economies based on paper currency, inflation is mainly triggered by the fact that governments place insufficient constraint on the amount of money that are issued. And in time this is precisely what leads to severe economical devaluation and ultimately, financial collapse for many.

Nevertheless, a hedge fund based on gold assets can be an inspired investment amidst the relatively unreliable fiat currency-based economies. The price of gold tends to increase to a significant degree whenever the value of currency decreases. Therefore, this yellow metal can safeguard you from critical financial breakdown.

For a diverse assets portfolio, exposure to gold is indispendable. If you decide to invest in gold, listen to what the experts have to say - allocate a minimum of 10 percent for gold and gold-related investments. Becoming an investor is not an easy job, contrary to most beliefs. You will be faced with a multitude of possibilities ranging from gold coins and bullion gold bars to online accounts, exchange traded funds, gold certificates as well as gold mining stocks. But, in the end, the manner of investment depends on the needs and demands of each investor.

You might already experience a feeling of eagerness in what concerns the purchase of gold. But before you start buying this precious metal think carefully on why you want to buy it and whether you are willing to become a short, medium or long term investor.

People start investing in gold for various reasons. Some of them are afraid of political instability and unrest, others of debt repudiation and default. Your reasons might be similar or different. But, irrespective of your motives, why not do the same? It does not matter if you are a speculator, investor or saver. Adding gold, an inflation-proof metal, to your portfolio, will make you feel both satisfied and secure.




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