Financial Dictionary -> Investing -> Gold

Is Gold a Good Investment During Inflation?

Whenever the economy experiences inflation or uncertain financial times, people look toward gold as a wise investment. It's a tangible substance that can feel more secure than paper money as the belief is that it will increase in value over time. However, recent history shows us that at times the Dow proved to be a better investment and at times gold was a better investment. The market fluctuates.

So, is gold a bad investment? No. It, like other investments, has the capacity of making or losing money. However, if you look toward gold and precious metals as a long-term investment, it becomes a safer bet. While gold is a bit more risky investment than bonds, it does have a tendency to stay fairly stable.

If you've decided to invest in gold, whether for speculation or an inflation hedge, you have several options:
- Gold
- Gold bullion securities
- Gold stock
- Gold certificates
- Other gold related options

Before investing, check to see if gold supply is higher or lower than the demand. You'll want to determine the best time to invest in order to get the most gold for your money. If possible, invest when the price is lower. However, since gold is a somewhat stable commodity, there may not be a huge difference in price at any given time. Of course, price is dependent on the economy at any given time. As a hedge against inflation, experts vary. Some say gold is a wise investment while others see it equally as valuable as investments in other commodities.

While it's always wise to consult a financial expert before investing, several investment options are available*:
- Central Fund of Canada (AMEX: CEF)
- Kinross Gold (NYSE: KGC)
- Market Vectors Gold Miners ETF (AMEX: GDX)

Something to keep in mind when considering any investment is to research it thoroughly and never put your eggs all into one basket. Investing in gold should be a fraction of your financial portfolio rather than the whole portfolio.

* For informational purposes only; the author neither recommends nor endorses investments in these venues.