If you're concerned about inflation and other calamities, gold can offer you a safe haven for investing. Although in the short term it can be as volatile as stocks, in the very long term, gold has maintained its value remarkably well. Investors can invest in gold through exchange-traded funds (ETFs), buy shares of gold miners and associated companies, and purchase a physical product. These investors have as many reasons for investing in metal as there are methods for making those investments.
Gold jewelry, coins and ingots are ways in which investors can transmit their wealth as an inheritance and are alternatives to holding gold stocks. Gold futures are a good way to speculate on the rise (or fall) in the price of gold, and you could even accept the physical delivery of gold if you wish, although physical delivery is not what motivates speculators. On the contrary, the owners of a business, such as a gold miner, can benefit not only from the increase in the price of gold, but also from the company's increase in profits. The government is the owner of all gold coins in circulation and ends the minting of any new gold coin.
In some cases, investing in gold literally means buying gold coins or ingots, although that's not necessarily the most liquid, safest, or easiest way to invest. A relatively small increase in the price of gold can generate significant gains in the best gold stocks, and owners of gold stocks tend to earn a much higher return on investment (ROI) than owners of physical gold. If you are opposed to having physical gold, buying shares in a gold mining company may be a safer alternative. Sales of gold coins from the United States Mint in the first quarter reached their highest level since 1999, according to data from the World Gold Council.
When evaluating the dividend yield of gold stocks, consider the company's performance over time with respect to dividends. Other investors may want to diversify their portfolios by buying a gold ETF, for example, that is backed by physical gold, but that doesn't require investors to store gold ingots themselves. Gold stocks generally rise and fall with the price of gold, but there are well-managed mining companies that are profitable even when the price of gold falls. Investing in gold is generally considered to be a hedge against inflation, since gold retains its value while the purchasing power of fiat currencies erodes.