In this unsettled market environment, many investors are considering ways to diversify their portfolios further.
One possible choice is a “safe haven” asset such as physical gold. Gold can act as a potential hedge against inflation and a falling dollar and is often an asset of choice during tumultuous economic and political times.
What to Ask
Before getting into the gold market, however, there are a number of key questions about your goals, your present portfolio and the economic environment you may want to consider first. For example:
Does your overall investment portfolio include assets that provide a potential hedge against inflation and a falling dollar? According to the U.S. Dollar Index, the dollar has lost 37 percent of its value since 2001 and that decrease may continue based on current monetary policy. If you are concerned about future inflation and the weakening dollar, it is worth considering gold.
Will having a physical asset-something you can hold in your hand-provide you with greater comfort about your portfolio? Gold has intrinsic value.
Are you in a position to invest in gold for the long term? Gold needs to be treated as a long-term investment: one with a three- to five-year—or, better yet, five- to 10-year—time horizon. You should be prepared to hold the investment for that long without liquidating it, although markets may dictate a longer or shorter holding period.
What’s the right amount of gold to own? Gold should be viewed as a diversification strategy, not a “bet the ranch” strategy. It’s prudent to allocate 5 to 20 percent of a total portfolio to gold, though others may recommend a different allocation.
Would you like to hold physical gold-such as coins or bullion-in your IRA? Physical gold can help diversify an IRA just as it can help diversify any other portfolio.
Is it the right time to buy gold? “A number of analysts continue to see a bullish trend for the price of gold, but we do not believe it’s wise to try to ‘time the market’ for gold,” said Scott Carter, CEO of Goldline International, a leading source of physical precious metals. “If you can treat gold as a long-term component of a larger investment portfolio, now could be a good time to get started,” he added.
To get a free gold investor kit and read important risk disclosures, visit http://www.goldline.com/learnmore. Goldline recommends that you review its account and storage agreement and risk disclosure booklet, “Coin Facts for Investors and Collectors to Consider” (both available in Goldline’s Investor Kit and website), before purchasing. All investments, including coins, currency and bullion, involve risk and past performance does not guarantee future results.