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Why and How you Should Invest in Gold

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Why and How you Should Invest in Gold

Demand for gold is heating up. Economic experts are recommending gold as an investment against weak currencies, inflation, and as an emergency money.

‘Why buy gold?’ is a question often asked by potential investors in gold bullion and coins.

Gold has been popular with investors for centuries,” writes Ken Little in About.com: Stocks, “Many modern investors turn to gold when the economy sours as a defensive play.” You can then Sell gold Adelaide to make huge profits.

“In times of economic uncertainty, gold is, well, the gold standard for safety,” continues Little, “Gold is a haven in times of inflation because it retains its value much better than currency-backed assets, which may climb in price, but drop in value.”

The Federal Reserve can’t “make” gold

The Federal Reserve can print billions of dollars to hand over to Wall Street–which raises the price of everything for Main Street. But the Fed cannot go into a room and “make” gold. There is a finite amount of gold in the world. With the demand for it so high, the price will continue to rise and rise.

Gold is tangible–you can hold it in your hands

Investing in gold is very different from buying stocks or bonds. You can take physical possession of your gold investment by buying either gold coins or gold bullion. In other words, you can hold it in your hands. Physically owning gold has a strong emotional appeal to many people. It has substance, unlike stock certificates which are merely pieces of paper — as our current recession so clearly demonstrates.

U.S. economic collapse makes gold a wise investment

An article in the Wall Street Journal says that, “The last decade has been a particularly good one for gold, for several reasons. Due to the U.S. economic collapse, large investors have been buying gold lately because they believe that even if the world economy continues to suffer, gold will have some value.”

Similar to an insurance policy, writes the Wall Street Journal, “gold becomes extremely valuable when some major event happens because it can be resold even in time of disaster.…it will help you get some money even if there’s a war or there’s a breakdown in government.”

The asset of choice for those who lose faith in their currency

A report in CBS New.com says that even at the current high prices, “gold’s charms are still alluring.”

“Historically, gold has been the asset of choice for people who lose faith in their currency,” writes Pirceno, “Owning gold is increasingly seen as a hedge against the hazards that come with holding the dollar.”

David Levenstein, a precious metals analyst at Lakeshore Trading in Johannesburg, South Africa, predicts that, “when we see inflation kick in as a consequence of the huge stimulus programs and massive escalating deficits, gold will soar even higher.”

The various ways you can buy gold

People buy gold to diversify their investment portfolio; to put aside to cash in for retirement; to include in IRAs or other retirement accounts; as a collectible (in coins); as a hedge against the falling dollar and a weak stock market; and some believe that the dollar will become worthless and that gold is the only currency worth having in a time of true emergency.

Gold jewelry, bars, stocks

After you decide upon how gold will best serve you, then choose the best form of gold to buy. Some people like gold jewelry. It is not always easy to sell, however, and you will not be offered anywhere near the purchase price.

Large gold bars are another option, but they need to be carefully examined to determine if they are indeed solid gold or simply gold plated and filled with a worthless base metal. Bars are not easy to sell and you will have to pay an examination fee which will take money away from your return. Then there are gold stocks, which are an investment in a gold mine and not actual gold.

This investment is closer to buying shares on the stock market. Even if gold jumps in value, there is no guarantee that the gold company that you invest in is making a profit.

The most popular–and safest– way to buy investment grade gold is in coins

Gold coins are U.S. and world coins minted before 1933–the year president Franklin D. Roosevelt took America off the gold standard and made owning non-numismatic gold illegal. These coins are common-date issues that are only worth the value of their gold content. They contrast with numismatic gold coins, which have a value about the gold melt value based upon rarity and condition and the rare coin market. Collecting these numismatic gold coins is a different way of investing in gold.

In 1974, it became legal again for Americans to own non-numismatic gold. U.S. Gold Exchange Group offers gold coins and gold bullion coins for sale. The U.S. gold bullion coins are available in the following weights: one oz., one-half oz., one-quarter oz. and one-tenth oz. Among other nations that issue gold bullion coins are Canada (Maple Leafs), Austria (Philharmonics), Great Britain (Sovereigns), and South Africa (Krugerrand) .

East Indians can’t buy gold fast enough

India is the world’s biggest consumer of gold bullion. And they’re not going to slow down anytime soon.

According to a report on Bloomberg,com, the purchase of gold in India this year may total between 600 to 625 tons, compared with about 480 tons bought in 2009. This is according to Anjani Sinha, who is the CEO of the massive sub-continent’s biggest bourse for the trade of physical gold. The demand for bullion almost doubled in the first half of the year. Why? Because investors sought a haven and higher salaries in India pushed up jewelry sales.

“This level of prices is already accepted, so during this period compared with last year, the demand will be higher,” said Sinha. “Indians are not selling, they are buying.”

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