Is Gold a Good Investment?

Investing in gold has been getting a lot of press lately and many people are questioning, “Is gold a good investment?” No matter how you look at it, whenever you invest in anything there is always a certain amount of risk involved. Whether you are talking about making an investment in real estate, stocks, bonds, municipal funds, futures, currencies or precious metals such as gold, there is always the potential for loss.

On the flip side, with the right investment there is potential to make a substantial profit. Unfortunately, especially in light of recent events which led to the demise of literally hundreds of banks in the United States, many investors are now reluctant to carry significant risk. This is because those banks failed due in large part to poor mortgage investments. Now investors are looking for safer financial products that perhaps will not make such a big margin of profit quickly, but will probably trend upward over the long haul. It is said that gold rarely depreciates. So then, is gold a good investment?

Again, it’s basically how you look at it. While investing in the stock market, commodities, futures and Forex may result in higher profits much more quickly, gold has rarely lost a significant amount of value over a long period of time. It is true that in the past the price of gold has dropped to some extent but if you look at the overall trend over a period of years you will see that it has steadily increased in value.

One of the reasons that gold will probably never lose much value is because it is recognized globally as opposed to international currencies which only have significant value within a specific population. For instance, the Canadian dollar can only be spent in Canada while a Japanese yen can only be spent in Japan. However, there are currencies which are recognized as markers around the globe, the US dollar being one of those. Even so, US dollar is susceptible to depreciation based on market fluctuations within the United States.

Gold is actually a very good investment for someone who is willing to hold onto it for any length of time. While investors have been known to make millions literally overnight with futures are currencies gold does not move that quickly. An investor who is willing to put a good deal of money into gold can perhaps double their investment, maybe even triple it, within a decade or two. However, if someone is looking to take on a greater amount of risk in gold might not be the best investment.

Another problem with buying gold is that it does demand an extremely large outlay of capital in the beginning. Think of it this way; if you were to buy 1 ounce of gold at $1000 by today’s rates and gold increased to $2500 by the year 2021 then you would have made 150% profit. But is making $1500 in a decade really a good investment? Perhaps it is if you’re just looking to be safe.

When questioning, “Is gold a good investment?” the bottom line is whether or not you are looking for a safe investment or one which has more potential for accelerated growth. There probably isn’t a financial analyst who would tell you that gold will depreciate to any great extent, because it probably won’t. Unfortunately, while safe, it will also take a long time to grow your wealth.

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