Before deciding the best way to invest in gold, you first need to figure out your objectives. Are you looking for a safe haven to put your money because of the recent economic turmoil? Or are you hoping to make a quick profit on short term trade? Or are you looking to diversify your portfolio by investing in commodiites? Once you know the answer, you can better decide which type of investment is best suited to your needs.

Gold As Currency

Given the chaos inherent in today\’s financial markets, it\’s no wonder more and more people are looking to gold as a safe haven. The mess that has become the European economy is sucking more and more resources from the countries that produce to countries that consume. Greece, Spain, Portugal and Italy have enjoyed years and years of spending more than they make and have racked up massive public debts. And now the entire Eurozone is reaping what they\’ve sown. France and Germany are having to bail out these poor decisions and lazy attitudes to the tune of hundreds of billions of Euros.

And the national debt here in the U.S. is staggering. The Federal Reserve seems to have adopted a strategy of printing our way out of the problem. And on top of that, the government doctors the inflation numbers in an attempt to make it look as though we\’re experiencing normal rates of inflation. Of course they are nothing of the sort. And the recent rise in gold prices reflects this to a great extent. Historically golds value has risen during times of inflation. And the last few years have been no exception. Take a look at this chart from Kitco.com that shows the price of gold in the last 10 years

This increase is largely due to the inflationary policy of the Federal Reserve. When Ben Bernanke said he would use the \”helicopter drop\” of money he wasn\’t kidding. By owning gold, many investors hope to offset their exposure to what would be considered massive inflation in a reasonable environement.

For this reason, a growing number of people are investing in physical gold. The thought is that if the financial wizards of the world banks can\’t sort out all of these issues, paper currency could become practically worthless. And to make real purchases might require hard currency such as gold or silver. There are a few guidelines to follow when purchasing physical precious metals.

Gold As A Trade

Because of it\’s recent run up, gold\’s short term price volatility has dramatically increased. Unfortunately, many of these price fluctuations are caused by geopolitical events that are extremely difficult to predict. Timeing a trade perfectly is often compared to \”catching a falling knife\” even is relatively stable times. But with the introduction of so much turmoil from the global debt crisise, it makes timing a trade even more difficult. This strategy is not for the faint of heart.

Gold To Diversify Your Portfolio

Investing in gold is a great way to diversify your portfolio. Most investors start out by investing in equities or stocks. There is good reason behind this. Stocks can be bought in companies that produce goods and services that people personally know and understand. If someone likes a particular product or service and thinks the company that is running it has a bright future, they might put some money behind this belief. Over many years you can end up with a portfolio full of stocks. This is often compared to putting all of your eggs in one basket. Since even good stock often get beaten up in a down market, it sometimes makes sense to spread your money into other types of investments.

Commodities markets have historically been more the realm of gamblers. But in more recent years several investment vehicles have been introduced that allow individual investors to buy commodities in a safe and easy to understand way. Exchange traded funds (ETFs), gold mining stocks are now available in addition to more traditional methods of purchasing actual gold coins or gold bullion. This gives the individual investor lot\’s of low cost (fee) options to choose from when making their investment. Gold is just one of many commodities. Since it is typically seen as a safe investment in down markets, the value correspondingly goes up when fear in the stock market goes up, and the value of the stock market goes down.

Once you have sorted out your overall objectives, you can start investigating the different vehicles available for investing in gold. Based on the above criterea, you should be able to find the method that is best suited to your tolerance for risk. That will be the best way to invest in gold for you.

Learn more about the best way to invest in gold and other precious metals by visiting http://www.investingingoldfordummies.com.

Learn more about the best way to invest in gold and other precious metals by visiting http://www.investingingoldfordummies.com

Author Bio: Learn more about the best way to invest in gold and other precious metals by visiting http://www.investingingoldfordummies.com.

Category: Finances
Keywords: best way to invest in gold, investing in gold