Will Gold Solve Your Debt?

Can I invest in gold now?

Will Gold Solve Your Debt?

By Sharon Freeman

In the midst of a debt crisis, should your family pay off bills or save money, consider debt consolidation, concentrate on just how to get by in life, or go ahead and invest in gold?  Sharon Freeman, a professional writer, who understands both investing and family finances is here with some financial insight for families.

Can I invest in gold now?

Should I invest in gold while I still have debt?
Free image courtesy of freedigitalphotos.net

Transcending the quagmire of debt takes guts and good decision-making. One of many inevitable decisions begs a chicken-and-egg dilemma:  Should you pay your debt first before buying gold?  Or should you invest in gold to pay debt?

Let’s hear both sides.

Debt reduction before gold investment

From a logical standpoint, starting with a clean slate and taking things from there presents a shorter route to financial freedom.

If you happen to gain money in the middle of a cash flow crisis, prioritize spending on debt payment.  It’s now or never.  This is an opportunity to make a significant difference to your financial standing.

In another time and another situation, gold would take precedence over reducing debt.  But if you are not solvent enough, speculating gold might not be the most level-headed strategy in the world.  The stakes are simply lofty.

In this context, take advantage of a significant boon to your finances by recompensing debt.  The return you get from settling an obligation is always to your advantage, whether the economy has gone south or north.  In comparison, the returns on gold hinge too much on market conditions.

As many experts would tell you, unshackling yourself from debt frees you fiscally, perhaps to dabble in relatively risky assets like gold.

Gold investment over debt reduction

Then again, gold has always been seen as an investor’s safe haven.  Its prices are known to shoot in the event of economic insecurity, which explains a bull run that stretched from the financial crisis of 2008 to the debt ceiling crisis of 2011.  In Sept. 2011, gold reached a historic high of $1,895 an ounce.

Such capacity for increases, albeit essentially unpredictable, has whetted the demand of inter-generational investors for the precious commodity.  This month, gold prices have rallied back to $1,371 an ounce for the first time since leaping into a bear market in April; the rebound could peak at $1,450 per ounce by year’s end.

On a macroeconomic level, gold makes for collateral of the first rate.  At one point this year, economists mulled the idea of selling US Treasury gold to avert the country’s government default.

Maybe the concept is not too far-out for an average borrower.  Gold, after all, is liquid enough to repay obligations through currencies, unlike equity.  At the same time, gold’s physical form makes it inconvenient to take on, say, a shopping spree—thereby saving you from sinking deeper into debt!

Gold will always be worth money, as has been the case since ancient times.  Cars and gadgets depreciate; real estate is still somewhat suspect after the housing bubble.  As a store of value, this precious metal can secure your future, notwithstanding the state of the economy.  Gold, in short, is a fallback like no other.

Debt relief

All investments carry adverse potentialities though.  You would do well to remember to review your objectives before investing in gold.

If your primary aim with gold is to pay off obligations, consider debt consolidation first.  With the tight economy, you may not be in the position to splurge the bulk of your returns on gold investment to debit payables.  Debt consolidation substantially alleviates the whole process for you.

Many non-profit companies are available to help you consolidate debts.  A debt consolidation company can at least negotiate the interest rates on your behalf.

After seeking relief from a debt consolidator, you may expedite the settlement process by using part of the returns on your gold investment. Now that’s golden thinking.

 

Sharon Freeman is a professional freelancer who writes about investing and the latest gold trends in the investing world.

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