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Gold Stocks

Investing in Gold Stocks

Due to the increasing popularity and economic changes, many investors are interested in investing in gold. Gold stocks are publicly-traded companies, similar to any other type of stock that you can buy or sell in the open market, but a gold company focuses on acquiring gold from the earth.  It can be easier to buy gold stocks, than to buy physical gold, however, this market sector is very complex and can be very intimidating to new investors. If you already have a brokerage account, you are already one step ahead to buying stock in the gold arena!

Why Gold Stocks?

Gold is in a bull market at the present time and is ultimately driven by supply and demand. There is currently a growing global demand for gold and a shortage of supply, therefore leading to the bullish market as opposed to a bear market. Because of the shortage, current production of gold becomes more profitable as gold prices increase, thus justifying higher stock prices. The gold reserves still actually in the ground become more profitable and as a result gold production will also increase. Eventually the higher gold prices will slow down the current gold demand and eventually a new and higher gold price will be established because supply and demand have reached equilibrium. What does all of this really mean? Basically it means that both gold and gold stocks are shooting upwards in strong bull markets and are making a fortune for those who have invested in gold. Additionally, analysts believe that the degrading of the U.S. currency by politicians is pushing investors to rely on other means.  Successful investors recognize that by investing in assets, such as gold stocks, that it will provide protection from our currency’s loss of purchasing power.  Gold is much more liquid than other forms of investments and is an investing strategy that may advance your stock portfolio quite nicely.

It is important to note also that since 2001, the gold price has been persistently increasing higher and higher.  This is believed to be a direct result of the central banks no longer selling gold into the open market. Previously they were responsible for selling gold into the open markets to make up for the structural supply deficit between the world demand and the mined supply available.

Basic Gold Investing Concepts

Before you decide that gold stocks is the way to go, be sure that you carefully determine what percentage of your strong portfolio you would like to risk in relation to gold investingPortfolio diversification is a must and investing in gold can assist you with that.  You may want to start with a very low percentage until you are more familiar and comfortable in the gold market.  Once you become more familiar you can then increase you percentage of gold-related investments, such as gold stocks.

Continue to research gold stocks and other gold-related investments to see if this is one of your preferred investment options. There is a lot of information available on the internet regarding investing strategies and investments basics. Be sure to do your homework and join an online community of respected fellow gold investors if you are seriously interested in investing in gold stocks.

 

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