After a September that saw record lows for the cost of gold, the precious metal seems to be rebounding and gaining strength as an alternative investment. As global equities drop, gold futures have been rising slowly, which is good news for those who count on gold as an alternative investment. Along with gold, alternative investments like real estate and selling a settlement have also seen growth.
There are many reasons to own gold. Generally, the metal holds its value. While the specific price may fluctuate, gold has proven itself throughout time as a valued commodity, something that people will always be willing to buy and spend money on. In case of emergency, financial or otherwise, gold can be good to have around. During the Great Depression, gold prices soared while other investments took a dive. For those with an apocalyptic bent, gold can be a good item to have around in times of conflict between nations. If the world ends and money fails, someone will probably still want gold. At least, that is what is portrayed in the movies.
There are different ways to own gold. The simplest way is to purchase the physical metal. However, the more gold that is purchased, the higher the taxes and fees will be on the purchase. Having a small amount may be beneficial for a family trying to hedge against rising inflation, but large amounts may be better handled by buyers with more capital. Other ways include trading on gold futures or on stockpiles of gold traded on different exchanges. Another gold investment is the option to invest in mining companies that dig for gold. The drawback to this is that a mining company is not gold, and the mining company can fail, and the investment is worth nothing.
Gold is not the only popular alternative investment. Investors have been looking to things such as real estate, investment grade diamonds, and even baseball cards as a way to ensure savings in the future. Recently, the practice of selling a structured settlement as an investment has come into vogue. Using the proceeds from selling the settlement on a more traditional investment, or even an alternative investment like real estate can be a good way for an investor to pad and diversify their portfolios. Structured settlements can be less functional than they were initially set up to be, and selling one and using the proceeds for other investments can do much for a family’s investments.
Investors should realize that alternative investments are alternative because they may not necessarily be as proven or stable as more traditional methods of investing. Gold prices do fluctuate. Housing markets can fail. The baseball card market can be flooded and nothing but the oldest and rarest cards are worth anything. The impetus behind these alternative investments is diversification. Focusing on one form of investment can lead to disaster. By spreading around investments, an investor can protect themselves against the failure of the stock market, or housing market, or anything.
When investing, it is integral that the investor takes time to carefully research what they will be investing in. By staying knowledgeable and involved in their holdings, they can be successful in the long run.
Opinion by Bryan Levy