Stock Market Timing Hedge Gold Investing
The oldest authentic gold coins were struck by King Croesus of Lydia (present-day Turkey) during his reign between 560BC and 547BC - and gold coins have continued as legal tender ever since. By legal tender I mean that you can travel to any country in the world and pay in gold bullion for services and products. The same can not be said for paper money.
While gold bullion similar to any other commodity, has periods of sometimes exceptionally strong volatility over the long run the returns are fantastic.
The yellow metal has proved a worthwhile winner for stock traders in the last several years. The best way is to invest in gold through funds, Exchange Traded Commodities (ETCs), bullion and coins.
Perhaps the biggest value of gold is that it functions as a safe haven or hedge against equity positions in a bear market. As the stock market drops, gold more often than not moves up.
Gold has been a obvious winner in recent years, after thrashing all other asset classes for the second consecutive year in 2008, the price of bullion has continued to race ahead in 2009.
In May 2010, it set a new high of over $1,240 an ounce.
Savers decide to invest in gold for typically one or two reasons - it is conventionally viewed as the supreme safe haven during times of economic instability and thus viewed as a wealth preserver. Additionally it is used as a hedge against the US dollar.
Being that stock markets have endured some of their most horrible falls on record in the last few years and that the Greenback has been floundering, it should come as no surprise that the yellow metal has been booming.
Also, it is liquid, so therefore trouble-free to sell and buy. It always has supply issues. Mining production peaked in 2003 and there is never an adequate amount to meet demand.
Professionals are divided about how much higher it can go over the short to medium time frame but the common consensus is that it will climb higher, with many anticipating levels as high as $1,500 to $2,000 over the coming years.
Investing in shares carries greater risk and gold mining shares have fared worse than the gold price. A regular suggestion among advisers is the Blackrock Gold & General fund, previously known as Merrill Lynch Gold & General. The fund has been around for more than 20 years. It invests mainly in the shares of gold mining firms.
The BlackRock Commodities Income investment trust has some 19% of its assets spread across gold, with other investments in platinum and diamonds as well as energy related stocks.
Article Source: FxTradingStock.com
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Discover stock market timing and investing through hundreds of free stock trading lessons, videos, news and more at stock timing
by: Sam Nielson
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Date: Wed, 23 Jun 2010
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