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Gold
Definition
Investing in gold is a tradition that goes back long before man created fiat currency. Gold is considered a precious metal and is the most liquid and widely traded of all the precious metals. Investing in gold normally occurs as a disaster hedge or inflation hedge (hedging against the loss of value of the home currency).
Using the term Gold :
Unsure about the amount of debt being issued by his country's government, Raoul decided to transfer a significant amount of his cash holdings into gold. He made this transfer as a hedge against potentially high future inflation (or depreciation of the dollar). When his concerns have passed, he will sell most of his gold and hold cash again.
Pay Special Attention To :
Gold values may move quickly and sometimes trade on emotion or fear. As noted above, many people hold gold as a disaster hedge. Therefore, it is often recommended that you allocate only a small portion of your total assets to gold (perhaps 5 to 10%) as an inflation and disaster hedge in normal markets.
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Related terms
Fiat Currency , Investing in Gold
'Gold' appears in the definitions of these other terms:
Alternative Investments Fiat Currency
