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Is It Too Late to Invest in Gold?

by PaulMarket

There's no question that people have started to doubt the US economy's stability, but the rest of the global market has not done any better. With all this uncertainty hovering around investments, people are starting to place their bets on stable outlets such as gold. Buying and owning gold bars can be quite a hassle, however, so many people invest in gold-backed ETFs and mutual funds instead.

Indeed, the price increase in many gold-backed funds mirror this overall market sentiment. SPDR Gold Shares even reflects a +31.73% growth through the last year. This can be attributed to intense media coverage on gold prices, so you can hold the media responsible for at least part of that.

Of course, there's more to any mutual fund or ETF than just the attractive figure it presents. The media is in large part responsible for the continued rise in gold prices. Extensive coverage on gold has certainly directed investors' attention to this investment possibility. Just like any commodity, the rise in prices is a consequence of the law of supply and demand. Sure enough, demand has been on the rise because of a combination of media coverage and buyers' pessimism with stocks.

Nevertheless, investing in gold-backed funds may expose you to underlying gold prices, but success still lies on the overall performance of the stock market. Despite this, you might still achieve better returns investing in gold-backed funds compared to the rest of the stock market in the short term.

So, should you place your bets on gold-backed funds? It's a question only you can really answer. Gold has been a consistent investment favorite even before the stock market was established. They are a safe commodity, but do remember these two details: First, gold pales against the rest of the market when outlook is bullish; and second, investing in gold-backed funds is never the same as owning actual gold bars.

About the Author: Frank Cole