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Buy Gold: Insurance for Your Investment Portfolio

July 06, 2010341 view(s)

Despite the large losses in stocks and mutual funds over the last 10 years, few investors have pulled their money out of the stock market. Recent polls show that people are more bullish on the stock market now than during the highs of a few years ago.

Investors are wise to consider risk in investments and look at gold as insurance against losses. Insurance is used to protect assets against the worst-case scenario and unexpected situations. Most people carry life insurance to protect their families from a freak accident, even though they don’t ever plan on having to use it. Automobile owners are required to have liability insurance and most Americans have some type of health insurance since out-of-pocket expenses in cases of serious illness or injury could be devastating.

Despite the large cost of insurance, people choose to protect themselves, rather than run the risk of catastrophic losses, should the unexpected occur. Oddly, though, when it comes to money and investing, many people do not sufficiently protect their assets from the risk of significant loss.

Most of America’s money is in investments that could go to zero almost overnight, yet most people do not have not one cent of their money protected in a gold-related investment, which has proven to be one of the absolute best ways to protect assets from serious loss.

Investors on the fence about moving assets into precious metals should consider their gold purchase as the insurance portion of their portfolio, protecting them from drastic falls, which can make the purchase much more palatable. If things get worse in the economy or stock market, or the double-dip recession becomes a reality, gold is expected to significantly outperform the rest of the market. Given the history of the last couple of years, this certainly appears to be the case.

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