Investing Advice for Gold Going Forward

May 19, 2011 GuestPoster Gold Investing

Gold is a hot commodity right now, one that many investors are watching.  If you are thinking of this as a potential asset to own, you should consider the following investment advice about this commodity.  It’s not a risk free asset whatsoever.

I will first talk about gold potentially being in a bubble.  Then I will explain how you can play this with online stock market trading without having to enter the commodities market.

The first question you need to ask is if gold is currently in a bubble.  The nature of bubbles is when it is overvalued.  It’s fairly easy to see in things where the intrinsic value can be calculated.  That means when the price soars way above its fundamental value.

So that is what makes defining a bubble in gold very difficult.  You see, no one really knows the fundamental value of gold.  Other than the fact that people like to make jewelry with it, it has very little value otherwise.  The only thing it has going for it is that is has been the hard currency of the world for the last 4,000 years.

There is another thing that is a downside to investing in gold.  It tends to have high costs associated with it.  If you buy gold bullion or any amount of it in any form, you have to store it somewhere.  If you want enough to be worthwhile, you need to have it secured.  That means you usually have to pay someone to keep it for you.  That’s not to mention the transaction costs for buying and selling it.

One of the best gold investment advice for small investors is to use gold ETF’s.  This way, you don’t have to go open a new commodity brokerage account.  Right from your online stock trading platform, you can trade gold like it’s a stock.

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