Gold Investments Remain a Solid, Long-term Component of an Investment Portfolio

Gold ended the week of March 5th with prices rising on Friday to erase a week of losses. The precious metal’s price is up over 9.93% in the past year, but it is down 16% over the course of five years. The precious metal hit highs in 2011.

USA Today discusses how gold held up against the stock market over a nine-year period.

The U.S. stock index between March 2009 and March 2018 rose 325%, providing investors with extensive returns in the process.

Gold prices were strongest following the recession, with investors turning to the precious metal in times of economic uncertainty. Gold rises when the financial world struggles or inflation rises. The price of gold has risen 43% over the nine-year period.

The precious metal has been struggling to gain traction, as the financial crisis led to a period of low inflation rates. Investor fears had also been kept under control as stock prices continued to rise, leading to gold being a less attractive investment vehicle.

A series of scams also led to investor fears rising against the precious metal. Investors chose to buy gold online, but some online sellers scammed investors out of their money. Investment scams came from companies that “held” on to their investors’ gold rather then send investors bars or gold bullions.

The gold companies didn’t have the gold stores available when investors wanted to cash out.

Investing in gold has changed, with numerous investment options available:

  1. Bullion. Direct gold ownership is offered with the gold bullion. The bullion doesn’t need to be a coin or large bar. Instead, the bullion is any form of pure or near-pure gold, which may include bars, coins or any other form of gold. Large bullion sizes make it difficult to sell a portion of your investments, so investors often choose smaller bullion bars or coins to offload their investments easier in the future.
  2. ETFs and Mutual Funds. Gold-based ETFs and mutual funds are an option. Shares represent a fixed amount of the precious metal. Funds are fast and easy to purchase or sell, and the investor doesn’t need to store the gold. Annual expense ratios are very low for gold funds, and this means that it’s an affordable investment vehicle.
  3. Futures and Options. Future contracts and options are also available in gold. The options allow for an investor to hold gold for a certain period of time and sell it off based on the expiry date. Options allow the investor to purchase gold at a pre-set price for the duration of the option if wanted.

Mutual funds may dedicate a portion of their portfolio to precious metals, but few funds will dedicate the entirety of their operations to investing in precious metals. Gold mutual funds that are gold-only have a low cost, minimum investment and don’t require significant research by the investor.

Investors can also choose to invest in gold mining companies or jewelry companies to leverage the gold market in a different way.

Owning physical gold is a top choice for large investors that find security in a tangible investment.

David Jackson

David is a personal finance expert, a professional male model, and an entertainment writer.