Gold could be much more efficient than cash when it comes to storing wealth. Interest rates remain low, meaning that your money in the bank “earns practically nothing,” CNN Money reports. If inflation is taken into account, that cash may have lost value. It is recognized that gold has a history of long-term stability.
Gold can be volatile in the short term and generally doesn't appreciate in the same way as a stock or a long-term bond. As a result, financial advisors often recommend investing no more than 10% of your savings in gold. Here are five different ways to own gold and a look at some of the risks that each entail. These are some of the main benefits of gold, but investment, like all investments, is not without risks and drawbacks.
If gold moves against you, you will be forced to contribute significant sums of money to maintain the contract (called margin) or the broker will close the position and you will suffer losses. Every day you hold an investment, you make the decision to keep your money stuck in it, regardless of its current market value. Therefore, gold in the form of GBS is more lucrative as an investment option than traditional forms of gold and can help you save while investing in gold. So, when you decide to invest in gold thinking that you're going to be “one of the smartest” if the dollar collapses, you may have thrown your money down the toilet.
With an increase of 6.2% year-on-year, the biggest increase since November 1990, it could be a good time to assess how you can save money when considering investments in gold. Contracts (whose value can also be settled with cash) can be negotiated between speculators who hope to make money betting that gold will increase (or decrease) in value before the settlement date. Gold mutual funds, which pool the money of several investors and manage it on their behalf, usually invest in the shares of mining or gold refining companies, although some also have small amounts of ingots.