Not Holding Gold Yet? Hurry Up!

If you havent held any gold in your portfolio and have been beating your head
against the wall as the precious metal has risen 133% since early 2008 and
tripled since early 2006 it may not be too late to jump in. Even as gold in
recent days has quietly risen closer to the $1,800 -an-ounce mark again, there
are several overarching and compelling reasons to allocate some of your
investment dollars to the yellow metal. Inflation had been almost nonexistent
since late 2008, and the U.S. even experienced deflation in 2009. In the 28
months between November 2008 and January 2011, inflation popped over 2% only six
times. Since January, however, inflation has jumped from 1.63% annually to
3.87%. Inflation results from creating too much money, and ever since the
present Administration got into power, more money has been printed than any
other time in U.S. history. It takes some time to see the results, and now
theyre showing up. Producer and food prices have also been rising. You may not
have noticed it, however, because food companies don't always raise their
prices they just shrink their container sizes. Gold is an actual physical
asset, just like real estate. It has intrinsic value. Some say its an inflation
hedge, but over the long haul, that isnt always true. I view it as a crisis
hedge and I see us in a major crisis regarding the devaluation of the dollar
and significant inflation. The more the dollar weakens, the more of those
dollars it takes to buy things. Theres also no end in sight to outrageous levels
of government spending thats been going on for years. Again, this is being done
with money printed out of thin air, making those dollars worth less and less.
Devaluing the dollar creates another effect: Central banks around the world are
less eager to hold dollars. Since the dollar had always been the worlds premier
currency, the only asset beyond that is physical gold. That creates demand, and
the more demand, the higher the price of gold. There are a few other reasons to
own gold. Its the most liquid of the precious metals, so its easy to buy and
sell. Its safe from political instability, at home or abroad. And all of these
things are going to be factors for a very long time. So, what are the best ways
to own gold? You can buy it via various stock investments. Numerous ETFs are
available, of which the most popular is SPDR Gold Shares (NYSE: GLD ), which
actually holds baskets of physical gold. Beware, however, that gold is
considered a collectible and is taxed differently than a stock investment, and
that difference does apply to this ETF. Another increasingly popular way is to
own the metal yourself. Yes, you can do that, and it isnt as difficult as it
used to be. Youve probably heard all the radio commercials about buying gold
bullion or coins. That actually works. In fact, DGSE Companies (NASDAQ: DGSE )
recently completed the acquisition of Southern Bullion Trading Co. a subsidiary
of gold refiner and market-maker extraordinare NTR Metals. DGSE has a few
Bullion Express stores open around the country, with dozens more set to open in
the very near future. Theyre aiming to become the brand name in physical gold
trading. Find a store, and buy your gold. As with all investments, you dont want
to go hog wild and buy gold to the exclusion of other investments. However, gold
certainly has a place in a diversified portfolio. Lawrence Meyers owns shares of
SPDR Gold Shares.