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Gold

Many investors purchase gold as an inflationary hedge.

Definition:

Gold is purchased by investors, either in gold shares or by taking physical delivery of gold bullion or coins. Many investors purchase gold and other tangible assets during uncertain economic times. During previous periods of rising inflation, gold and other hard assets traded to higher price levels.

Examples:

A client is concerned about the future of her securities investments. On her financial planner's advice, she may invest up to ten percent of capital in alternative investments. She chooses gold coins as an investment. She identifies a large dealer whose liquidation commission rate is eight percent. She plans to hold the coins long-term and does not anticipate the need to trade them.

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