Inflation measures of the relative level of prices for goods and services. In terms of currency, it usually results in devaluation, which bodes poorly for the banking sector. Gold has a more perennial value than any currency and so it acts as a hedge against inflation. Learn the basics of safeguarding your savings against inflation by buying gold.
Instructions
1. Review what drives gold prices. Gold will always maintain intrinsic value. Unlike securities, the value of gold lies in the gold itself---not the company or nation it represents. Understand the difference between an investment in gold and an investment in securities.
2. Invest in an exchange-traded fund (ETF), which like a mutual fund, you can trade like a stock. Look up and research ETFs that specialize in physical gold (use Yahoo! Finance as a reference---see Resources section). Look for a fund that specializes in gold that has exhibited superior price performance and has a fund manager with a good reputation.
3. Go to Yahoo! Finance. Yahoo! Finance is the top rated investment research site on the web according to Alexa.com. Click on the Investments tab and then click ETFs. Do a search under Specialty - Natural Resources and Speciality - Precious Resources for a listing of possible ETFs to choose from. You can sort by holdings, return, risk profile, and trading volume.
4. Download the most recent 10K for StreetTracks Gold Shares (traded on the NYSE as GLD). This is one example of a well known gold ETF. Look up the current value of the ETF on the NYSE. (See the Resources section for a link.)
5. Download the most recent 10K for iShares Comex Gold Trust (traded on the NYSE under "IAU"). This is another example of a well known gold ETF. Look up the current value of the ETF on the NYSE. (See the Resources section for a link.)
6. Determine the number of shares you can afford to purchase to hedge against your current portfolio. This will depend on the current price of both ETFs. Once you've made a decision on how many shares you would like to purchase, contact your broker. Provide the ticker symbol and the price at which you would like to purchase shares.
