Investing in Gold

Is it too late to invest in gold? Many pundits think the SIX year rally in gold has come to end, while other think the recent stall in gold price is just a brief hiatus as gold continues to move on up. Let's take a look at some pros and cons of investing in gold.
PROS

• Gold is a scarce commodity whose production is limited.
• Demand for gold is increasing. Investment managers, central banks of the world and the rising middle class of India & China are all buying gold. The monsoon wedding season in India is a popular buying time for gold since it is used in marriages for dowry and adornments.
• Gold is considered a safe haven and typically performs well during a time of turmoil. With continued unrest in the middle east, rising oil prices causing inflationary pressures and the declining value of the dollar, things aren't so rosy.

CONS

• The price of gold is too expensive and most of the money has already been made.
• Gold is too volatile for the average investor and doesn't provide the returns for the risk involved.
• Buying gold out of fear of inflation is a bad bet since gold barely keeps pace with inflation.

No matter what the financial "experts" say, in my own opinion I believe having some investment in gold is important. As a benchmark, you should have between 5-10% of your savings in gold related stocks. Currently, I have 5% of my non-retirement savings in gold related stocks and another 5% of my retirement savings in gold related stocks. If you are interested, here are the different options for investing in gold:

• Buy gold coins or bullion. This is easy to do. We have been buying gold coins (South African Krugerrand, Canadian Maple Leaf, Australian Kangaroo, etc.) for the birthdays of our God children in recent years. They are beautiful, interesting, portable and easy to save. We recommend Austin Coins.
• Gold ETFs or Mutual Funds. There are two primary gold ETF (electronically traded funds) that imitate the rise and fall of a group of stocks, or in this case the value of the commodity of gold. The two ETF's ticker symbols are GLD and IAU. There is also a closed end fund called the Central Fund of Canada, ticker symbol CEF.
• Gold mining stocks. These stocks may be more volatile than the commodity itself, but this also means the value of these stocks will increase faster if the value of gold rises. One of the most popular gold mining companies is Newmont Mining (NEM). Other mining companies include Goldcorp (GG), Nortern Orion (NTO) and Royal Gold (RGLD).

There are some great resources on the web where you can get more information to decide if investing in gold is right for you. I have included some sites below. Happy Investing.

Gold Stock Bull

USA Gold

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