Just the other day, someone told me they were considering a gold ETF or gold stocks for their IRA. I asked them what their motivation was for thinking about this asset class.
As it was explained to me, the person was worried about a “worst case scenario”. For example, a nuclear explosion in space that knocked out all power grids and that everyone was left without power for quite some time. Or a war on our soil here in the U.S. Another concern was the declining purchasing power of the dollar and future inflation as well as more monetary easing by the Fed. The list was extensive.
Then I asked, what happens if one of these things actually happened. How is that gold stock going to help you? Can you exchange that gold stock for food or gasoline? The answer is no. You buy gold stocks because you think the price of gold is going to go up (or down if you sell the stock short). It is a digital record that you own x amount of shares of stock in a company that mines gold, or processes gold, or the like.
Same with a gold etf fund. When the world goes to “hell in a handbasket”, what good is shares in a fund going to do for you? Hey great, the fund price will escalate and your net worth will go up, but you can’t exchange that piece of paper for real gold that you can use as currency to buy things that will ensure your survival.
It is worth considering what you want to own gold for before you invest in it. If you are a survivalist, you want gold you can actually use as a unit of value to buy things you need. If you are a trader, then an ETF will suit your investment goals. As an investor, gold stocks might be a good thing if you think the price will go up.
Check out the gold ira reviews and info you find on the linked site for more information on why gold investing is a top-of-mind strategy for investors today.
Read about the gold standard here.