Gold, the Perfect Antidote to Wall Street Chaos


"So you think of gold as just a wartime investment. Think again."

So you think of gold as just a wartime investment. Think again. Because it's negatively correlated—meaning it rises when stocks, bonds, real estate and Treasury bills fall—gold is a solid investment any time government debt translates to inflation. And it's the perfect antidote to current Wall Street chaos and difficult financial times, according to New York-based Ross Metals.

Silver has less monetary trading clout. Its appeal today lies in the huge industrial demands. Because it's worth so much less per ounce than gold, it takes up more space to own a comparable amount.

Platinum falls in the "very speculative" category, as some financial advisers would say, and it does not convert to currency in doomsday scenarios.

Gold investors face two paths at the outset: Do you want to own actual gold or stocks? Stocks appeal to the aggressive risk-takers. Or, to blunt the edge, people with portfolios under $20,000 should gear towards gold stock mutual funds. However, the final decision rests on the same factors as any investment: know your allocations, diversification always rules, and determine how the stock holdings in a portfolio would pan out during a recession.

More "conservative" investors would say no to stocks and heads straight for the real thing. The market has shown often that gold stocks go down over the life of a bear market like the one we're in now, just like most other common stocks.

Gold can be bought in forms of pure gold jewelry, coins, and bars. Bullion coins come in one-twentieth, one-tenth, one-quarter, one-half and 1-ounce weights. Most people are familiar with the American Eagle, Australian Kangaroo Nugget, Austrian Philharmonic, Canadian Maple Leaf and South Africa Krugerrand. Bars sell in weights between 1 troy ounce and 400 troy ounces.

Experts say this more cumbersome form pays off. In bull markets, the premiums rise on popular purchases, so coins cost a bit more than bars of the same weight.

Related Articles

Get Our Streetwise Reports Newsletter Free

A valid email address is required to subscribe