March 20, 2009
-- For centuries, gold has been a commodity revered for its combination of near indestructibility, beauty, rarity and its status as a universal currency. Empires and nations have stored and traded it as a medium of international exchange and as a means of wealth preservation. Individuals have used gold as a store of wealth and as insurance against the fluctuations and depreciation of paper money and other macroeconomic and geopolitical risks.
Gold should be included in all diversified portfolios and some gold should be owned by all investors and savers. A good rule of thumb would be a minimum allocation of around 10% to gold and related gold-investments. One’s motivation for buying gold is fundamental to deciding in which form you should buy it. Are you a speculator, investor or saver? Do you wish to take a short-term speculative position in gold? Are you investing for the short, medium or long term? Or are you diversifying, saving or using gold as a form of financial insurance which is the primary and most important reason for owning gold bullion.
Private gold investment is most usually done by way of gold bullion, bars, coins or gold certificates, and ultimately investing in gold is all about the diversification and management of risk, i.e. not putting all your eggs in one basket. A healthy investment portfolio will include a wide range of assets, as we know from recent history markets can and do crash.
Every fully diversified investment portfolio should include an amount of physical gold; after all it is a universal finite currency, not to mention perhaps the best way of ensuring wealth preservation. Gold is not an investment per se, rather a form of financial insurance. Mr O’Byrne, Executive Director and Senior Analyst at Gold & Silver Investments, one of the leading financial services advisors specialising in wealth preservation, advises that physical gold should not be traded. He said: “When investing in physical gold one should make sure it is safely stored with a third party, and not traded. An investment in physical gold should be considered more as saving for a rainy day, and a way of passing wealth from one generation to the next.”
“Then once a solid base or core holding of gold bullion is achieved in a portfolio then other investments in gold such as mining stocks and mutual funds, and other more speculative gold investments, can be considered.”
Gold & Silver Investments provide bespoke strategies and advice for wealth preservation and their website offers a great range of advice and information on investing in gold.
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