3 Advantages to Buying Gold

by Investing School on February 17, 2010

Investors have come to know gold as a reliable and consistent product that can be added to portfolios for a host of different reasons. If you spend any time listening to the pundits, then you’ll know that there are many advantages of investing in gold. Though these pundits are not always right in their opinions, they do seem to hit the mark when talking about gold.

What are three major advantages to buying gold? It starts with the ability to spot a good price and it continues with the reliability that gold adds to any portfolio, large or small.

1. Buying opportunities are easy to spot

Unless you are a seasoned financial analyst, then you probably have trouble looking at charts for stocks in order to figure out a good entry point. You shouldn’t take this too hard, though, because that stuff is complicated. The nice thing about gold is that it’s much easier for investors to pick their spot. Many people refer to gold as the opportunistic investment product. This has some merit, since buying in at a low point can lead to nice profits when you finally sell your gold investments.

With gold, the things that impact its price are relatively easy to calculate. It correlates well with the US dollar, so a basic understanding of the direction of the American economy will lead you to some dips in the price of gold. Sharp investors can take these opportunities and pounce on them, producing a scenario where profits are easily made.

2. Adding a tangible asset to your portfolio

Another advantage of investing in gold is that you can add something real and tangible to your portfolio. The problem with stocks, bonds, and the like is that you can’t hold them in your hand. This can make them feel less real and you feel like you have less control. Though it does not happen often, stocks can completely fall out in terms of value, leaving investors with absolutely nothing to show for their time. Gold, on the other, hand will always retain some value. This type of liquidity makes your portfolio much more diverse and helps to limit the amount of risk you are opening yourself up to.

The best investors in the world will tell you that a diversified portfolio is the best way to make money and protect your savings. If you have lots of different types of investments going on, then you will still have some value, even when one some section of the economy takes a turn for the worst. This can also lead to better selling opportunities for those investors who want to sell their assets on high water marks.

3. The private nature of gold

With most investments, like real estate, stocks, mutual funds, and bonds, federal reporting is required. Gold provides you with a little bit more privacy. You can go out and buy gold coins from individual sellers and hold onto that asset without the regulations and mandatory reporting that goes on elsewhere. For people who value their privacy, this can make a huge difference.

Likewise, this difference in the buying and selling process can often lead to better opportunities. You have many options for when and where you sell gold. You could sell it to a jewelry company or you might sell it overseas. With stocks, you are limited to selling the item through a broker and on the stock market. This limits what you can do and how much money you can make. The idea when investing is to leave all doors open to potential profit. Gold has many open doors and it has value that goes around the world, making it a truly unique investment asset.

Ultimately, all of these things combine to create a good situation for investors that are targeting gold. There are many gold buying opportunities out there and if you happen to get in when the price is low, good money can be made on the sale. Others are buying gold for the long haul, since its price tends to go up slowly over the years.

The short term fluctuations offer buying and selling points for investors, while the long term viability offers security for people who need a more secure asset. In that way, there are items for everyone who is thinking about making this investment. With all of the different ways to buy gold and all of the different outlets where it is available, this is one product that makes sense.

About the Author: Shaun Connell writes weekly updates at his gold coins site and is a huge fan of gold investments. To learn more, check out Buy Gold Coin — an introductory article for beginners.

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