Gold is an interesting commodity that many people see as either an object that can physically be held or an investment strategy. This popular item is always debated during certain times of the business cycle and will always be debated for years to come. The questions many people bring up are when and how to invest in it, and if it can generate great returns. Below are a few ways to invest in gold and how you might use it in your personal portfolio.
When the markets decide to pull back and people get scared, they run to safe haven assets such as gold. Of course many people think gold will never lose its value and this may be true. There are people who invest in gold as an insurance policy in their portfolio, hedging against the bearish nature of the overall market. Taking a step back however, if the extreme did occur and the dollar and markets lost all of their value, we would revert back to the barter system, and how valuable would gold be then. For now, gold does provide a nice hedge against a bearish market and can be used as such.
Gold is a very active asset and is utilized all around the world. For the active investor and trader, you can take this volatility and use it to trade, giving you large enough swings in the market to make money. Over time, you would have to be great to make a profit doing this, but it certainly can be done. Also, if you are not looking to get into the physical asset, you can take a look at an ETF, which will track the gold market while giving a liquid environment to buy and sell in.
Buy and Hold
Lastly, there is the simply buy and hold strategy that may not give you the best returns, but as stated before, can give you a great hedge against a bearish market. How you can look to play this is when the profits come in, just take your position off the table and wait for the gold market to pull back. Also, simply having it in your portfolio to act as it is may also work for you current situation.
Gold is an asset that is widely traded and will be for years to come. Since it has a finite amount, it will always be in demand and price will always fluctuate more than a normal equity. Be sure to understand your current holdings because this may not be a great fit for your current situation. Research and understand how it is affected during overall market conditions and use it to your advantage. If at the end you still have questions, reach out to an investing professional and then can help to formulate a game plan using gold as a potential holding.