Opportunities To You
Gold has certainly resurfaced on the
investment radar. After being down in the doldrums for twenty years since the
1980s, prices started climbing in 2001. From a low of $255, it rose by
double-digits percentages (actually an astounding 18.8 percent per annum) every
year since. It broke the $1,000 mark for the first time in March 2008, slipped
below that for a few months, and then resumed its climb. At the point in
writing, the price is hovering at the $1,350 mark, just below the all time high
of $1,368 reached on October 13, 2010. This made gold one of the best (if not
the best) performing investment in the past nine years, beating stocks, real
estate, bonds and other commodities.
This being the case, I suppose the question is
then: "Should you own gold?" The overwhelming answer is yes. If you
already own gold, good; go out there and buy some more! If you have not done so
yet, then it is time to start buying some! There - the answer cannot be more
straight-forward than that!
At the same time, this is where things get a
little bit interesting. Yes, you should own gold and you can make serious money
from it. However, the traps in gold are as wide and deep as the mines
themselves! If you chose incorrectly, you could actually lose money even when
the price of gold is rising. (Anything that provides an opportunity to make
lots of money also comes with the opportunity to lose lots of money!)
Next, I can also vouch that you will be
getting conflicting advice when it comes to gold. First, there are few gold
experts which means that most people know very little about it. Next, some
people will tell you to buy gold in x form and avoid the others. It is very
likely that these people are selling x. Some others, including financial
planners and wealth advisors, will give you a hundred reasons and may even
provide facts and figures to prove why you should not buy gold. The reason is
simple: if you buy gold, they get nothing! Further, it will mean less money for
you to buy whatever they are selling.
Furthermore, unlike days of yesteryear when
the choices were limited when it comes to gold, today, there are a multitude of
choices. These include collector coins, commemorative coins, ETFs, shares of
mining or trading companies, certificates, pools, Gold Savings accounts,
futures, options, Structured Notes and even digital gold! It's enough to make
your head spin just trying to make sense of the choices.
Add the fact that most people are clueless
when it comes to gold, and you can see why investing in gold can be a hazardous
thing. While all the products mentioned earlier are gold in some form, they may
not behave like the real thing, and therefore may not give the desired return
to the investor. In fact, some of them should not even be considered as an
investment. Take for example, jewelry. While bangles, rings and pendants are
certainly gold, they cannot be considered as an investment in the real sense of
the word. And why not? There are a few problems with jewelry when we're
evaluating them from an investment perspective. First is the high mark-ups
charged by the dealers, which can be 100 percent the price of the gold. Second
is the extremely high discount charged by the dealers when you are selling the
piece back to them. For example, one local gold dealer will knock off 30
percent (!) from the price when they are buying it back from you and that my
friend, is an exceptionally high charge. Third and perhaps the most serious
problem: you can only exchange it for another piece of jewelry; you cannot get
cash.
And this is just one of the traps! There are
plenty more that awaits the unsuspecting and uneducated investor.
So, just about the only way you are going to
get an unbiased - and therefore correct - decision on gold is to get yourself
educated on it by reading as much as you can - ideally before investing a
single cent in it! Otherwise, you could be losing money instead of making it!
Azizi Ali is Malaysia's premier writer,
speaker and coach on money matters. He is a Chartered Financial Consultant
(ChFC) and holds an MBA from University of Bath, UK.
Log on to http://www.beahappymillionaire.com to find out more about Azizi and how he can
help you lead happier prosperous lives.
Article Source: http://EzineArticles.com/?expert=Azizi_Ali
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