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Gold Investments Likely to Grow as Hedge Against Inflation

June 11, 2010 - Inflation is starting to creep back into the picture for investors, and top financial advisors are pointing more than ever to gold investments as a hedge. Because gold holds its value better than currency and other monetary equities, a gold investment is a good bet for inflationary economies. A government in financial straits cannot ramp up the “printing” of imaginary gold. Gold seems to be less volatile than oil, holds its value better than land, and is extremely portable. In the last ten years, gold has appreciated nearly 400 percent -- an excellent investment return.

Inflation is increasing worldwide, and this trend is expected to soon hit the U.S., says Martin Hutchinson of Money Morning. India has a 14.5 percent inflation rate, followed by Russia at six percent and Brazil at 5.4 percent, with China at 2.8 percent (a deceptively low rate, according to some experts). A gold investment is a smart hedge against inflation. In fact, Jason Toussaint, managing director of investment for the World Gold Council, looks at gold investment as a good long-term strategy for portfolio diversification. “We're seeing a large paradigm shift in the view of gold by investors, from what used to be … a short-term tactical portfolio tool, to a much longer-term focus,” he states.

According to Evy Hambro, manager of Blackrock Investment Management Ltd.’s World Mining fund, gold has reasserted itself as an alternative currency, and we are experiencing a “true bull market for gold.”

The price of gold is continuing its overall climb on several market indexes. In May, it reached a record high of $1,243 per ounce, and gold futures trading on SPDR Gold Shares (GLD) achieved a record $1.8 billion during the last week of May. On June 8, Comex gold investment futures closed at another record-setting high of $1,245.60 an ounce -- the highest rate since gold futures starting trading there in the 1970s.

Overall, the future of gold looks bright, despite recent fluctuations in day-to-day trading. For investors looking for a good hedge investment, gold investments are a smart choice.

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Stewart Lawson

Senior Staff Writer - Gold-Investment.info