Facts About Gold Investing
Gold, an internationally recognized liquid asset held in reserve by major governments, is traded around the world each day. For individual investors seeking more diversification in their portfolios, gold offers an alternative asset option to add to the traditional mix of stocks, bonds and cash.
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History
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Nations over the centuries have used gold as a currency. The U.S. Mint's brochure on American Eagle Gold Bullion points out that China used gold more than 3,000 years ago, the Romans first minted gold coins around 50 B.C. and in 1795 the U.S. Mint produced its first gold coins. Today gold does not freely circulate as everyday currency, but it is widely found in many investment and retirement portfolios.
Gold as an Investment
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Interest in gold as an alternative investment has increased in recent years. As the World Gold Council website points out, "the real price of gold has endured a century characterized by sweeping change and ... more than retained its purchasing power." In addition to its role as a hedge against inflation, gold is a good portfolio diversifier, moving up in value when there is turmoil and a downturn in the equities markets. Gold also serves as an effective hedge against a downturn in the value of the dollar or other national currencies. Gold is a real and finite asset. Gold does not go bankrupt, close down or become insolvent.
Gold Coins
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Gold investors can buy gold bullion coins issued by governments around the world.
gold coins image by drx from Fotolia.com
Gold investors have the option of owning gold bullion coins issued by the U.S. and several international governments. Authorized by the Bullion Coin Act of 1985, American Eagle Gold Bullion Coins are now one of the world's leading gold bullion investment options. Other popular government gold bullion coins include the Gold Vienna Philharmonic produced by the Austrian Mint in Vienna; the Gold Canadian Maple Leaf, the official gold bullion coin of Canada; and the Gold South African Krugerrand. The U.S. Mint website offers a listing of retailers offering American Eagle and other gold bullion coins for purchase.
Exchange Traded Gold Bullion Funds
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Several gold exchange traded funds (ETFs), which track the price of gold, are now marketed as securities backed 100 percent by physical gold. Popular gold ETFs include the iShares COMEX Gold Trust (IAU), launched in January 2005; the SPDR Gold Trust (GLD); and the recently established ETFS Physical Swiss Gold Trust (SGOL) that stores its gold bullion in vaults in Switzerland. These ETFs can be purchased from a variety of large funds network investment services as well as from ETF investment sites.
Gold Mutual Funds
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Most gold mutual funds include not only gold bullion within their holdings, but also investments in gold and silver mining companies. The Tocqueville Gold Fund (TGLDX), the First Eagle Gold A (SGGDX), the Van Eck International Investors Gold A (INIVX), the OCM Gold Investor (OCMGX), Fidelity Select Gold (FSAGX) and the American Century Global Gold (BGEIX) are some of the better known gold mutual funds. Minimum initial investment in these funds varies from $1,000 to $2,500.
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References
- Photo Credit gold image by Raimundas from Fotolia.com gold coins image by drx from Fotolia.com
