Gold is risky but probably no riskier than stocks. As a student of modern portfolio theory, I tend to look at risk from a portfolio perspective. Let say 10% of your portfolio is in gold and it goes down by 10% then your portfolio loss is 1%, hopefully it will be offset by gains in your other investments (including money sitting in deposits). A real example is I put money in two hedge funds that I bought at the same time. Two years later one is down about 10% the other up 40%. So they net off to be about a 15% gain. No complains there.
Re: mining company. You’re absolutely right on that and that’s company specific risk you will face if you only invest in one company. Similar to the above, the easiest way to reduce this risk is to buy a bunch of them so if one “didn’t find any success” in mining, it will hopefully be offset by another that did. I assume you’re not into stock picking (neither am I). Take a look at stock symbol ASA which is a closed end fund that invests in a bunch of mining companies. In case you’re not aware, you buy closed end funds like you would an ETF or ordinary stock, i.e. through a broker like Schwab.
As for “hold an asset without worrying about your asset holder”, truth is there’s always going to be some exposure. However, take GLD the gold ETF as an example (or funds in general). They are generally set up such that the assets are ring fenced and held separately from the assets of the companies invovled(custodian bank, trustee, fund management company, broker,etc). If let say the fund mgt company go the way Barings did a few years back, there will be no impact on your claim to the shares of the ETF.
In general I don’t like gold buillions because of the high transaction cost. No idea how much really but I’m sure it’ll be higher than the $8 Ameritrade charges for buying the gold ETF. And you’ll probably store it in a safe deposit box then when you want to sell you have to drive down to the bank, pick them up, risk getting robbed between the bank and the shop where you can sell the bullion, etc etc. Too much trouble.
