Terms apply. Investing in a gold stock, ETF or mutual fund is often the best way to get exposure to gold in your portfolio. Learn more about how to invest in stocks and how to invest in mutual funds. Check out our full roundup of the best brokerages. One benefit of gold investments is that they can help diversify your portfolio. Diversification refers to investing in a range of assets across a variety of industries, company sizes and geographic areas. Owning stock in a gold mining company or a gold ETF exposes you to the gold industry, and since gold does not necessarily move in tandem with the stock market, it can help further diversify your holdings.
If you decide that investing in physical gold is the right move for you, here are some things to keep in mind. Find a reputable dealer. From working with pushy salespeople to falling victim to scams, navigating the world of buying and selling gold can be sketchy. Doing some homework ahead of time can help you avoid a bad investment. Watch out for fees. Find secure storage. Storing gold safely can get expensive. Consider purchasing insurance.
Insurance is an additional cost of owning physical gold. Much of the supply of gold in the market since the s has come from sales of gold bullion from the vaults of global central banks. This selling by global central banks slowed greatly in At the same time, production of new gold from mines had been declining since According to BullionVault. Geological Survey, gold saw a rebound in production with output hitting nearly 2, metric tons in As a general rule, reduction in the supply of gold increases gold prices.
In previous years, increased wealth of emerging market economies boosted demand for gold. In many of these countries, gold is intertwined into the culture.
In China, where gold bars are a traditional form of saving, the demand for gold has been steadfast. India is the second largest gold-consuming nation in the world; it has many uses there, including jewelry. As such, the Indian wedding season in October is traditionally the time of the year that sees the highest global demand for gold. Demand for gold has also grown among investors. Many are beginning to see commodities, particularly gold, as an investment class into which funds should be allocated.
The key to diversification is finding investments that are not closely correlated to one another ; gold has historically had a negative correlation to stocks and other financial instruments.
Recent history bears this out:. Properly diversified investors combine gold with stocks and bonds in a portfolio to reduce the overall volatility and risk.
Gold should be an important part of a diversified investment portfolio because its price increases in response to events that cause the value of paper investments, such as stocks and bonds, to decline. Although the price of gold can be volatile in the short term , it has always maintained its value over the long term. Through the years, it has served as a hedge against inflation and the erosion of major currencies, and thus is an investment well worth considering. Geological Survey. Accessed Feb.
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Here's how to make the most of your money. Like this story? Skip Navigation. Jennifer Liu. The current coronavirus downturn is slightly different, however. Gold is being pulled in two directions. There is no good time to buy gold The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
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