Investing in gold is something that many investors who want to secure themselves from downturns do. It also helps them earn a lot. If you’re one of those investors and you want to know how you can invest in gold, this article is for you.
Here are the best ways to invest in gold.
This is one of the simplest and most straightforward ways of investing in gold. It’s also one of the best options to invest in physical gold.
However, there are huge downsides to consider.
For one, the markup is high. That means its price or value falls down substantially at the resale price. Of course, extremely expensive jewelries may retain their value, but that would mean high initial capital from you.
Bullions and Bars
Just like jewelries, bullions and bars are great options when investing in gold. However, it still suffers from the markup prices.
For instance, raw gold needs to be turned into coin or bars first. This process is very expensive, and usually the price of the transformation is passed on to consumers.
Moreover, most dealers will put their own markup in the price as their compensation for acting as middlemen in the transaction.
Another consideration in buying gold bullions and bars is that you have to store the gold you’ve bought. You may have to rent a safety deposit box from your bank, and that means paying for the ongoing cost for the storage.
Meanwhile, if you want to get a direct exposure to gold without having to physically own it, you can go for gold certificates.
These notes or certificates come from companies that have god holdings. They are usually for unallocated gold, which means that even though no physical gold is backing the certificate, it has enough gold to support the all outstanding certificates.
There allocated gold notes, but they are more expensive. Another downside is that the certificate can only be as good as the company that supports it.
Gold Mining Stocks
Mining stock prices tend to follow the prices of the commodities where they focus. But since you will be investing in businesses that can expand over time, investors can benefit from increasing production.
On the other hand, since these are businesses, there are also inherent risks. For instance, miners don’t always produce the same amount of gold as expected. Disasters can also play a huge factor in this method.
Another good way to gain direct exposure to the yellow metal is an exchange-traded fund. These are funds that pool investors’ money to buy assets.
These funds may buy gold directly on behalf of the shareholders. You will probably have to pay some commission fees, but you will be able to benefit from a liquid asset that has direct investments in gold coins, gold bars, and bullion.
Futures contracts are advanced investment vehicles that are very useful for pros but very risky for beginners.
It’s a highly leverage contract that let a buyer and a seller agree on the sale of the asset at a specific time in the future at a specific price.
Futures are traded on exchanges, so if you want to trade futures, you will have to find a broker that services them.