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Investing/Buying Gold ETFs in 2012
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In 2011 one of main worries of American people was huge government debt. This is not likely to change in 2012 and beyond. Not only the
current size of the debt that is scary but also the rate with which it is growing.
During Obama administration US debt increased by over 1 trillion dollars every year. Bush, of course, was the one who launched this process.
The amount of debt is quickly approaching 100% of GDP and is going to become completely unsustainable within few years.
The debt is so huge, it's hard to imagine how US government is going to repay it. Historically, one sure way to get out of this was
inflation. This is also the most likely scenario in the current situation. And this is not going to be mundane inflation of 2%-3% per year we experienced
since 80s. To significantly lower the debt, inflation will have to be in double digits.
What would be the consequences of double digits inflation? The obvious one is that prices on everything will shoot up. The other one, and this
one is much worse, is that it will devalue the savings of many people. Especially hard hit will be retirees. Imagine: you are working hard
all your life, save for retirement, do everything right, and then your savings are being wiped within very short period of time.
So how do one protects himself from the inflation? Historically, one of the best bets against inflation was gold. As the inflation picks up, people
who don't want their cash to devalue, will rush into buying gold and other precious metals. This will push the price of these commodities
to the sky, but it will save investors from ending up with worthless paper.
Many people believe that the best way to invest in gold is to buy companies that produce gold. Sounds logical, right? Actually, it's wrong.
In 2011 gold went up quite a bit but stock prices of many gold producing companies actually went down. In some cases - in double digits!
The best way to buy gold without actually physically having it, is to buy gold ETFs. There are a few of them but there is one that is the
largest and most widely used. Its symbol is GLD and it's traded at NYSE. One could buy and sell it on the whim, the same way one buys or sells
any stock or ETF.
Investors also don't need to overpay for (gold) ETF and stock transactions. For trading gold ETF we recommend OptionsHouse brokerage firm,
that charges just $3.95 for stock or ETF trade. Read full Optionshouse Review.
Canadian citizens could also buy gold and have it stored safely for them through brokerage firm called Questrade
(read Questrade Review).
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