Gold prices have been falling this spring, from a record high of $1,887.70 in the summer of 2011, as the U.S. stock market has climbed to record highs. Now that investors worldwide feel more optimistic about stocks and bonds, the price of gold could fall even further this summer — unless a crisis in the Middle East or elsewhere shakes their confidence.
However, the falling price of gold could also be considered as a buying opportunity for some investors. If you are building a diversified portfolio with many different types of assets, you might want to include a small percentage of gold.
Like stocks, bonds, real estate or other assets, gold has both positive and negative aspects as an investment. In that regard, gold can play a protective role in your portfolio. Since gold prices historically have tended to rise during periods of high inflation, owning gold can help guard against the risk of a serious loss of purchasing power in the future.
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