All About Investing in Gold: The Easy Way to Get Started
By John Jagerson and S. Wade Hansen
McGraw Hill, 2011
$22.00, 242 pages
In “Investing in Gold: The Easy Way to Get Started,” professional investors Jagerson and Hansen seek to fill a knowledge gap for gold traders. Bridging that gap takes the reader on a journey through the world of gold markets, including physical, futures and options, leaving nothing out, except for perhaps unnecessary history. Yet the book offers seasoned gold investors something new and useful.
The vagaries of the international finance markets create quandaries for investors and make the timing of this book about the role gold can play in a balancing an investor’s portfolio particularly apposite.
The authors make a strong case that gold should form an essential part of any investor’s trading strategy, but it need not be in the form of physical bullion. Smart investors use futures and options, exchange-traded funds (ETFs), stock options and leverage gold against fluctuating currencies and inflation. Tools such as these are well documented in this well written and informative book.
This book taught me that gold is a financial instrument and not a commodity. The gold market differs from stocks and bonds, for example, because gold does not provide a financial return. In that sense, the gold market is more akin to currency trading with its gyrations and machinations.
Having gold in your portfolio, and how much, depends upon whether you invest for the short-term or the long-term. As part of a well-rounded, diversified portfolio designed to offer solid returns over time, the authors argue a substantial allocation of gold is invaluable.
The gold market is very active and liquid, making it attractive to short-term investors and traders. For example, in 2010, gold futures set a new daily dollar-volume record of $55 billion in value, the SPDR Gold Shares ETF (GLD) trades an average $1.8 billion in value every day and the London Bullion Market trades more than $24 billion in physical gold every month (at least that is the amount it discloses).
To put this into perspective, all the North American stock and option exchanges trade an average of $8 billion per day in dollar volume combined.
“Investing in Gold” is one of about 20 titles in the “All About” finance series and represents a valuable companion to those books that explore the world of investing, hedging, trading stocks and futures and options. “Investing in Gold” is an easy read, written by two authors who, as founders of the investment education web site Learning Markets, LLC seek to imbue individual investors with the knowledge to take control of their investment portfolios.
As one who is worried about potential market scams in scrambling together the resources to buy gold, this book allays concerns and offers a valuable insight into the various tools available to ensure that the average investor can gain access to and trade in gold as part of a balanced portfolio.
Patrick Kelly is a freelance writer with a background in commodity market reporting.