Editor’s note: This article was first published in June 2010. Its forecast that gold could enter a bubble in 2012-2013, because the crisis would drag on and some countries might sell their reserves, has expired and should be read as a prediction of that period.
In times of crisis, invest in gold. That is an old saying, because gold rarely loses value. That said, by 2012–2013 gold could well enter a bubble, since this crisis looks set to last longer than usual, and some countries might decide to sell off their reserves, triggering and confirming the bubble the price of this metal had been in.
We can invest in gold in many ways: by buying it as coins and bars, as private individuals, or by buying deposits and investment funds that specialize in gold.
Investing in gold works much like the stock market. It consists of buying gold at a lower price so you can sell it at a higher one. That is why, in times of crisis, you see so many “we buy gold” ads.
Some families look to raise cash from the gold they own (jewelry, watches, etc.). That is where an investor can get a good purchase price and later sell at a higher one.
The disadvantages of investing in gold are the instability of its value, because it is not regulated by the government but by the law of supply and demand (although this can also be seen as an advantage). Another drawback appears when you invest in physical gold: you have to take care of storing it, with the risks that involves (theft, the cost of renting a safe deposit box, etc.).
Among the advantages of investing in gold, we could mention how easy it is to invest, since it is a simple investment that does not require advice from an expert. Another advantage is that you can sell it whenever you want, so you run no risk when you decide to turn your gold into cash.
The only thing you need to know if you decide to invest in gold is when the best time to buy it is, in what form, and when to sell it.
Further reading
Featured image: Stevebidmead, CC0 1.0, via Wikimedia Commons.
