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Bank, and Barclaycard, among others. Historically, gold has played a major role in the economies of many nations. Although it is no longer a primary form of currency, gold is still a solid, long-term investment and may be a valuable portfolio addition, particularly in a bear market.

Gold was considered a universal currency for hundreds of years. Due to its recognized value worldwide, a gold standard was used as far back as the Byzantine Empire over 1, years ago. Until recently, in fact, gold was used as the world reserve currency. Inupon the signing of the Bretton Woods Agreement, the dollar replaced gold as the world reserve currency. However, inRichard Nixon removed the gold standard in the U. Although it is no longer a primary form of currency in the developed world, gold remains a popular investment for a number of reasons.

While gold can be a great investment for a number of reasons outlined above, be aware of the disadvantages before investing:. The best time to invest in gold is when inflation is expected to take hold and force down the value of the national currency.

The earlier you can detect such drops, the more room you have to make a profit. Announcements by reserve banks to print out more local currency can also indicate a good time to invest in gold. When the local currency is strong, and inflation is not expected, there is not much room for the price of gold to rise. With that said, if there are expectations of increased demand from markets that require gold, such as jewelry and electronics, consider investing in gold to benefit from the potential price pressure.

Practically speaking, however, a buy-and-hold passive investing strategy may be best for the ordinary gold investor. There is no hard and fast rule as to how much gold you want to hold in your portfolio. This will depend on how you feel about the market, how comfortable you are with volatility, and your overall financial needs and timeline. Ultimately, you should employ the same portfolio management strategies for allocating gold as for purchasing other investments.

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There are many different ways to invest in gold:. Gold can be a profitable investment when all others fail. For example, exactly how much will it cost you to store and insure physical gold? What are the tax differences for your income tax bracket between investing in a gold ETF or a gold mining ETF?

Knowing the details can make a big difference when it comes to profitability. As tempting as it may be to buy a lot of gold in a struggling economy, try not to get carried away.

Gold bubbles exist, and in order to prevent yourself currency trading momentum being over-exposed to any asset class, you always want to maintain a well-diversified portfolio.

Kalen Smith has written for a variety of financial and business sites. He is a weekly contributor for Young Entrepreneur and has worked as a guest blogger on behalf of Consumer Media Network. Buy sofia stock exchange holds an MBA in finance from Clark University in Worcester, MA.

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Is Buying Gold a Good Investment?

Spend More for High Quality or Buy Cheap to Save Money? Is Buying Gold a Good Investment? By Kalen Smith Posted in: Share Tweet Pin Comments Advantages of Gold as an Investment Although it is no longer a primary form of currency in the developed world, gold remains a popular investment for a number of reasons.

Gold make money buying gold on ebay be easily converted into cash anywhere in the world. Aside from actual cash, the liquidity and universality of gold is unparalleled. Gold tends to maintain its value over time.

Economists argue that even the price of gold is not indicative of its value. That is, even if the price decreases, the underlying value of gold does not change much. This is largely because there is a fixed quantity of gold due to the fact that it is a commodity, whereas the U.

Gold rises in value when inflation takes hold. Since gold is priced in U. As a result, during inflationary times, gold offers a much more stable investment than cash. Adding different securities to your portfolio is an essential way to diversify and lower the overall risk of your investments. Moreover, because gold often moves inversely to the stock market and currency values, it provides an especially effective way to diversify.

Gold is still a universal commodity. Although countries sell their currency futures, treasuries, and other securities around the world, unlike gold, they are subject to political chaos. Gold is used as an input in products. Since gold is used in the production of various products including jewelry and electronics, there is a reliable demand that further stabilizes the price of gold.

Moreover, in times of increased demand, these markets can force the price of gold higher. Disadvantages of Investing in Gold While gold can be a great investment for a number of reasons outlined above, be aware of the disadvantages before investing: Other investments such as stocks and bonds may derive a portion of their value from passive income in the form of interest and dividends. However, the only return you can make on gold is when the value increases and you decide to sell.

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Gold can create a bubble. In turbulent economies, many people start investing in gold, but when investors start to panic, gold can become overpriced. This, in turn, means that your investment could lose value once the price corrects itself. Need physical storage and insurance. If you choose to buy actual, physical gold, you will not only need to store it, but you will need to insure it as well.

Capital gains tax rates are higher on most gold investments. Since gold is considered a collectible in the U. Increases in gold value coincide with local currency devaluation. Many economists argue that gold only increases in value when the dollar is devalued or inflation is strong. Investing in Gold - History, Determining If It's a Good Investment. Gold as an Investment - What's Better?

What Is Inflation Definition - Causes of Inflation Rate and How to Fight the Effects. JoinSubscribers Sign up below to get the free Money Crashers email newsletter! Read More from Money Crashers Lifestyle Time Banking Explained — How to Trade Services With a Time-Based Currency. Lifestyle 9 Everyday Carry Items You Need to Have to Be Prepared for Anything.

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