Gold Is The Best Investment For 2010!
Never put all your eggs in one basket. Diversification is the name of the game when you construct your investment portfolio. You need to diversify your investment into different assets!
Diversification ensures that all your eggs don't go down together. When you diversify your assets into different assets like stocks, currencies, precious metals like gold, silver and platinum, you are trying to protect your investment portfolio from going down at the same time. All these assets are not correlated and move independently so with diversification, the chances of their going down together reduce.
Why this is the best time to diversify your portfolio with precious metals? FED has been printing a lot of greenbacks. Inflation is going to become a major problem as the economy recovers from unemployment and recession. Rather, all over the world, almost every government has been printing cash like mad to ward of the recession.
So, this decade that has just started a few days back is going to cause inflation to rise and make it an inflationary decade. When inflation rises, money loses its value. You need more to buy the same quantity of goods. Gold and silver are considered to be the best investments in times of inflation. During high inflation gold is the ultimate store of wealth.
Adding gold to your investment portfolio will hedge it against inflation to some extent. Gold and silver make excellent long term inflation hedges. By investing in gold now, you will be preserving your wealth in the coming decade. In addition to that you will also make sizable capital gain as gold prices are in an uptrend for the last many years. Right now, gold prices are at their historical peak.
Gold and silver are rather very versatile investments. When you invest in stocks, you are only investing in a stock. But when you invest in precious metals like gold and silver, you can physical own them in the shape of coins and jewelry. You can also have paper ownership in the form of gold and silver futures or in the form gold ETF or you can even invest in the stocks of a gold mining company.
Now, investing in gold with the purpose of hedging against inflation does not mean that you cannot speculate in the gold market. Investing and trading can go side by side. You are a better judge of how to go about it!
by: Ahmad Hassam
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