Alternative Assets: Gold

One of the most well-known alternative assets is gold. This precious metal has been associated with wealth and power for centuries, and still today, it is a part of many investment portfolios. As an investment, gold has some unique characteristics that cause it to differ from other alternative assets. Gold relates to investments like paintings or antiques because it is a tangible product, but is similar to stocks in that its price can be charted and analyzed using the technical analysis rules that are used to evaluate securities. Because of this unique situation, many of the technical analysis courses offered at universities around the country can be very beneficial for traders looking to invest in this alternative asset.

Gold is often used in financial portfolios to hedge against market crises, such as the broad market crash in late 2008. Because gold is a physical alternative asset that can be used to create valuable products, it maintains it value better than other financial assets. Even when the broad market is crashing, or in times of political turmoil, gold usually manages to maintain the majority of its value. This means that in times of financial or political stress, gold often increases in value. For many traders looking to broaden their investment positions, gold is an attractive alternative asset because it will likely gain in value while others assets are on the downswing.

This does not mean that gold is a risk-free investment. The prices of gold have been known to be highly volatile, and do indeed underperform against the market as well. Because of this volatility, it is important to be able to evaluate the movements of gold prices. Gold prices can be charted and traditional technical analysis techniques such as moving averages, Bollinger bands, and Fibonacci lines can all be applied the gold’s price chart. These techniques are taught in many universities across the country, making it relatively simple for students to add gold as an alternative asset to their investment portfolio.

Investors looking to buy gold have two main options. They have the option of purchasing physical quantities of gold and holding onto the tangible asset. The most common ways to purchase gold in this manner is to buy bullion coins or bullion bars which are pure gold pieces. These can purchased from the U.S. Mint of through private firms. Gold is also traded on the futures market. Purchasing a gold future is essentially buying the rights to purchase gold in the future, although physical gold rarely changes hands. Rather, the futures contracts, which are valued according to the value of the gold they represent, are traded among investors. This is a much riskier way to invest in gold, but the profit potential is much higher than with other investment routes.