Gold has always been a great investment choice for people looking to diversify their portfolios. Yes, you may think that gold is old fashioned but it has its uses. In the current economic climate, the most obvious use for gold is to cut your total portfolio risk. This is because Gold is a risk cutting investment. This has been true for centuries now. Gold has always been used as the primary investment vehicle all throughout Asia. Both men and women wear Gold as jewelry and it is considered one of the top investments in Asia. This was of course true all over the world at one time or another.

Like it was mentioned earlier, Gold is a traditional investment. Just like Real Estate investing and the more recent HUD housing investments, Gold can be very profitable if invested in correctly. Now remember that Real Estate is also a wonderful investment. This is because along with a market value brought about by supply and demand, Real Estate, unlike Gold, also has a real value. You can build a shelter or grow food in your land. Gold on the other hand has no real value except for its perceived value as a shiny metal good for making jewelry.

One reason why Gold is so valuable is because of its use as a great hedge. What this means is that it is like an insurance policy for your portfolio. If you are worried that the stock market will fall, you should consider buying some Gold before the fall actually happens. If you were to do that and the stock market falls, then the value of Gold will go up. People run from a falling stock market like rats from a sinking ship and they park all that money into gold causing the value of the gold to go up significantly. This is how you can make money with a gold hedge.

Another reason why gold is a great hedge is against inflation. In the worst case scenarios when the market is falling and inflation is rampant, Gold is the only savior. The value of Gold will sky rocket as the stock market tanks and the value of paper currencies fall. If you can buy one apple with one dollar today and one apple with two dollars tomorrow, that means that the value of the apple has increased relative to the dollar. If you had a truckload of apples you could sell them or you could just buy Gold. The value of Gold will increase if the value of currency falls due to inflation. Now you can buy a lot more apples with one gold coin than you could yesterday.