Investors who want to put their money into precious metals turn to cold more than any other metal. Gold is considered and excellent hedge against inflation and the vagaries of economic or political turmoil. Like other markets gold is subject to speculation, and it is common to purchase futures contracts and derivatives based on gold.
In September 2010 Joe Foster, a portfolio manager at the Van Eck International Gold Fund, explained why gold can be an excellent hedge against inflation:
“The currencies of all the major countries, including ours, are under severe pressure because of massive government deficits. The more money that is pumped into these economies – the printing of money basically – then the less valuable the currencies become.”
At a time when money made on bonds, equities and real estate does not properly compensate for risk and inflation, then investors turn to gold and other alternative types of investments in greater numbers. Some portfolio managers think of gold as a kind of “portfolio insurance.”