Jul 21 2009
Should You Own Gold?
Gold has come to the forefront again recently. I always get wary when every newsletter or CNBC figurehead starts touting the latest hot new investment. It’s a sure sign that the investment is going to crash and burn.
That said, I still think it is a great time to buy gold. Given all the money the Fed is printing, once all of that makes it to the public (lots is still being held by the banks who are extremely tight on loaning) there will be no stopping inflation. Even if by some chance that doesn’t happen, gold is also a deflationary hedge, and deflation is also a real risk right now.
The ideal way to own gold is the bullion coins (not rare gold coins!). For example, the Mexican Peso, Kruggerands, Canadian Maples, etc. are good options. You can order them online from reputable brokers (try Gainesville Coins or Camino Coin) and store them in a personal safe or safety deposit box. Try to keep the premiums over spot price under 5% if possible.
While physical gold is your best bet, it is not always practical, especially in large quantities. Some options below:
- Central Gold Trust (GTU) - closed end fund that is backed by physical gold
- Market Vectors Gold Miners ETF (GDX) - exchange traded fund which tracks the AMEX gold miners index
- SPDR Gold Shares (GLD) - strives to match price of gold bullion
Again, try to purchase when the NAV is at a premium of 5% or less, but that may be difficult.
Silver is also a good commodity to own right now, but maybe we’ll do a different post on that!
