Understanding gold investing options

Gold is the most popular of all the precious metals as an investment. Investors generally buy gold as a hedge or harbor against economic, political, or social fiat currency crises (including investment market declines, burgeoning national debt, currency failure, inflation, war and social unrest).

The market for this commodity is subject to speculation as are other markets, especially through the use of futures contracts and derivatives.

Gold is actually more than just an investment as it is a highly valued possession that is often more than the cost of money. Prices have a tendency to rise during times of economic troubles and demand increases in countries experiencing downfall in their economies.

As the demand increases, the prices rise as well. During inflation, many investors pull money from their stock and bond portfolios and invest in this precious commodity as it is often thought of as a primary hedge against inflation.

There are two main ways of investing in gold: you can buy it in physical form or invest in financial products. There are pros and cons of each type of investment. The Financial Markets have invented a number of solutions for investment purpose. People can invest in stock exchange; buy shares of multinational companies; buy foreign currency, prize bonds and others.

There are numerous Financial Products to invest in gold. You can purchase gold stocks,mining companies, gold ETFs, gold Mutual Funds in place of physical gold or bullion. These products are available through most Brokers and you should consult a professional and conduct your own research.

You can invest in physical gold in the form of bars and coins. There are dealers who invest by buying and selling through the international exchange. Another option to invest in Physical form without having to actually worry about keeping it locked up in a safe is using the gold accounts of banks.

The units in the accounts in the banks are backed by physical gold held by the banks and you receive the banks assurance that you can convert your holdings back to cash anytime. Futures contracts are still another way of investing in the price movement of gold without actually taking possession.

With futures, you can leverage you money many times enabling you to purchase a larger amount than you could otherwise. You can often deposit as little as 10% of the purchase amount (i.e. $10,000 deposit to control $100,000 worth).

While this may sound great there are tremendous risks involved. If gold moves up 10% you could double your money and you would lose all of your investment if it dropped 10%. Investing with futures are NOT for the inexperienced.
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