Gold Rushed: Investing in Gold

That’s right, we’re late on the reporting but gold is over $1000 US dollars for an ounce. Yikes.  Is it too much?  No one really knows, but all those skeptics that spoke out as it traveled down below $900 after coming near these recent highs a while back are eating their words….

Or are they?

The Washington Post has a great article on why some investors are fearing the sudden rise in gold, and also why some investors think $1000 is just the beginning. Inflation on the rise, the dollar weakening and a market that isn’t quite sure why it’s almost back at a DOW of 10,000. That’s what has investors scratching their heads and disagreeing.

One things for certain, gold and ETFs like GLD could still be good buys if we continue to see the fed printing money, and worldwide banks scooping up gold as a hedge to the weakening dollar.

While we’re not going to give a buy recommendation on gold right now we do think it’s one to watch. Nearly $300 off it’s high of earlier in the year, an ounce of gold may be the place to put your money during this possible inflationary time.

But nobody is giving any recommendations lately.  Not on stocks, nor bonds, not even on currencies. There is just wordwide uncertainty in all markets.

However, if we don’t have deflation, and in fact have a period of inflation, investors may flock to silver and gold and start buying gold bars.  Most likely though, they will start buying ETF’s like GLD and SLV.  These ETFs start buying up gold which increases the demand for gold thus raising the price.

However, the demand worldwide for gold may be reduced by lower production of all goods and services in the world, including China and India.

Either way, buying gold now, at these low prices, may still prove to be a good idea.

Recently we discussed the iShares ETF IAU which is a gold trust ETF like the silver trust ETF SLV. Now here’s another one that, if you’re into ETFs, you may be interested in. It’s called streetTRACKS Gold Trust (GLD).

Like IAU and SLV, GLD buys and stores gold and allows investors to buy a share of the gold it owns. The price basically tracks the price of gold per ounce at about 1/10th the value of an ounce of gold. Fees are taken off for running the fund, which is the reason for not tracking the price exactly.

Currently, the precious metals market has been taking off as investors try and find a safer place to put their money than the stock market. If you want to buy gold, rather than buy gold bullion, you can purchase gold through the ETF and take advantage of long term capital gains tax benefits. If you buy gold bars or coins you’ll need to pay full capital gains taxes.

These are just some of the advantages that buying gold through ETFs such as IAU and GLD can offer.