Many people who are looking for a good investment that yields a high return and is also stable, often ask is gold a good investment. People want to know whether it is worth investing in gold or not and whether they should invest long term or short term in the precious metals market.
There are some out there that will tell you that investing in gold short term is a great way to make some quick spending money without much risk. At the same time, many others will insist that if you want to make some good money, you should hold onto the precious metal for months; if not years.
One has to remember that gold is one of the oldest and proven means of paying for things. It will always hold a value no matter what happens with the economy.
What’s more is that it is not uncommon for the value of gold to increase when the value of the dollar decreases. Many people know that the precious metal holds value so when the economy makes a turn for the worse, people grab as much gold as they can afford to hold on to.
Before we can look at whether gold is a good investment or not, we need to start by first looking at what an investment is. An investment is anything that you can put your money into with the hopes of getting back more than you put in. Under this thinking, even gambling is an investment; the two are much more similar than most people are willing to believe.
In any investment, as the profit potential increases, so too does the risk associated with the investment. Take the lottery for example. You can win millions in the lottery but there are only a few actual winners and many losers. If you spend a dollar on a ticket and win nothing, than you lost. The same can be said with any investment including in the precious metals market. Like any investment market, there will always be the few who are the winners and they win the investment of the others who lose.
However, there are two investments which generally break this rule. Real estate, notwithstanding the recent housing market crash, was an investment that over time would always be worth more than when you fist bought in. Precious metals are the same way in that there is a limited quantity and as such, the demand drives the value up continuously.
Real estate and precious metals are the only truly stable investments for the long term investor.
There is also the potential of making a decent profit on investing in gold for a short period of time only. More and more investors are buying into gold exchange traded funds which are shares in an investment fund that deals in leveraged purchases and sales of gold commodities.
Since gold fluctuations are so small, the ability to make any money from them requires that you have a large buying power and can invest in tons of gold at a time. Most people cannot afford to buy a ton of gold which is why these funds have been developed over the years. By pooling everyone’s money together, experienced traders have the ability to make very large trades and share their profits with their investors; you.
However, ETFs are also very risky. Many funds have died over the years and many investors have lost everything because they held on too long. But, if you are wise and you make well-informed trades, then you can make a fairly decent income from investing in gold.
Many people still chose to invest in gold physically as well. They buy scrap metal like old jewelry and plated items. They also purchase coins, plates, bars and other forms of gold bullion when available at a good price.
There are those who will insist that investing in plated items is not worth it because of the costs associated with separating the base metal from the plating. However, those who invest in scrap gold, profit from those who simply throw out their plated items. Once they have enough, they can then go through the process of separating the plated gold. Since gold only dissolves in aqua regia, dissolving the cheaper metals in various acids is usually done first; it also reduces the storage space needed for the plated metal.
Just remember that no matter what you or how you chose to invest in gold, you must never spend any more money than you can afford to lose since there is always an inherent risk associated with any investment. Make sure that you learn as much as you can prior to investing in anything to ensure that you are making a well-informed decision regarding your investment. Always remember that the process of learning and improving your investing skills is a never ending process.Dan Craig