Investing in Gold and Silver in the Coming Years: Hedging Against Economic Distortions
As we go forward through 2012 and beyond it is safe to say that we will continue to see trends of distortion in the national and global economies. This of course assumes that governments will continue the economic activities of the past. Given the present state of things, I would say that is a safe bet. So, the issue at hand is how regular folks can invest wisely and hedge against economic distortions. This is where gold and silver come in.
Are Gold and Silver Still Viable?
This has been the question on the lips of many folks who would like to put their money in precious metals, but have watched the prices of silver and gold steadily rise, especially in the past decade. Now, one of the nice things about silver is that despite its record high price, it is still quite affordable. This means that the everyday person with a small budget can get in on silver pretty easily. Gold, on the other hand, can be more challenging. Why? Gold is a much more sought after commodity, and with supply dwindling and demand rising, and with inflation as high as it is, gold has been hovering at $1600 to $1700 an ounce for some time. These figures are what scare away a lot of people.
One suggestion that may work for you is to look for gold in smaller amounts, and in varying forms. In other words, look for what is known as “junk” gold. This refers to old gold jewelry, and old gold coins. If you have ever driven passed a pawn shop and seen a sign out front that says, “We buy old gold!” this is what they are talking about. Fortunately, you do not need to open a pawn shop in order to get into junk gold. Common places to find old gold jewelry are going to be estate sales, garage sales, and even the occasional antique mall.
Buy Gold Stocks
Another way to get into gold is by investing in mining companies. One area that can be pretty successful is investing in junior mining companies. This can be a risky investment, so it is wise to research the company, its founders, and its mission statement, and then compare them to other companies that have been successful. If they seem to have a similar vision, and if the potential seems very strong, then buy some stock and see what happens. If the mining company takes off, then you stand to make a sizable profit. A downside to buying gold stock is that it is paper and not a physical commodity.
In short, if you are hesitant about getting into gold and silver, know that they are still accessible to the investor on a budget. Do your research, and take some calculated risks, and you stand a good chance of hedging your bets against economic distortions in the coming years.
The author is a gold enthusiast, and writes extensively at golddeputy.com. You can click here to read more of his thoughts on buying and selling gold.