Stock Trading School - Gold - An Integral Part of Investment Portfolio

Gold has been an important part of economies all over the world since time immemorial. In fact, it was used as a form of currency for centuries. Today, however, it is one of those precious metal commodities used by investors to shield themselves from debt crises or any other currency crises. Let's take a closer look at the real importance of gold in any investment portfolio.

As mentioned above, gold was considered as a standard currency in the early economies. However, sometime during the late 20th century, gold began to be replaced by government backed currencies, and was changed into a commodity. This replacement was triggered by the Nixon shock of 1971, when the United States stopped backing the dollar with gold. By the start of the 21st century, economies around the world converted their currency into government backed currencies.

Now, these government backed currencies have a major fallacy, which was clearly seen during the recession of 2007. Currencies and other virtual stocks are not only dependent on the supply and demand and speculation of stock markets, but also on various political and economic policies and conditions. Moreover, there have been various instances of investment bubbles, where prices can rise and fall rapidly, and very unpredictably at that.

However, gold as a precious metal is protected against political or economic conditions. It is a commodity with real value that stays intact, especially when it comes to physical gold. As an investor, if you have some gold in your investment portfolio, you can be rest assured that you are protected to an extent from rocky stock markets or government debt crises.

When you talk about gold, you can invest either in physical gold or in paper gold through exchange-traded funds or ETFs. You can also buy gold through gold stocks or through mutual funds that trade with gold. However, buying gold stocks or mutual funds are just about the same as buying stocks, and stocks are always vulnerable to rises and falls in the market.

When it comes to buying gold in its physical form or gold bullion, there are some challenges in that arena as well. Gold bullion can be bought from various dealers or banks, but this calls for various storage arrangements as well. The storage and security of your gold bullion can be taken care of by other specialized companies.

The importance of gold as an investment option in today's market conditions is strengthened even more as governments are beginning to back up their gold bullion reserve. Asian countries such as China and India have expressed their interest to buy and store more gold. Moreover, government backed currencies such as the US dollar is losing its power steadily. The prices of gold, however, are set to go up as supplies have already become negligible and the demand is increasing by the day.

Thus, it can be clearly seen that gold is a great way to safeguard your investments from any unforeseen downfall of stocks or national currencies.