Gold has become an incredibly popular investment over the last several years as prices of the metal have increased, and investors have become leery of the policies of the United States government. Most people own gold as a hedge against inflation, which can occur if the Federal Reserve prints too much money for the economy (which many believe is currently occurring). Some also own gold in case the entire financial system collapses, since it will still hold its intrinsic value.
As the price of gold continues to reach new heights, many more investors are looking to grab a piece of the pie for themselves. Of course, there is no guarantee that gold will continue to appreciate in value. But if you’re looking to get in on the action, here are a few ways you can invest in gold.
Gold has long been the world’s most important currency. By 1792, it was also the US’s currency standard. Despite radical changes in the banking industries, gold continues to be a powerful investment opportunity. The good news is, it is never to late to buy gold for investment purposes. In fact, it is a good idea to invest intelligently in gold. Here are four ways you can do so.
Look Into Gold Bullion
Gold bullion is both 99.5% pure and also legal tender. Buying bullion is actually one of the most popular ways to invest in gold. You can buy it in jewelry, ingots, or gold bars, and it holds the same investment opportunity.
The only reason you might not want to buy gold bullion is if you want to actively trade it. To buy it find a reputable gold dealer in your area or a jewelry store if you’re going to invest in jewelry instead.
Consider Exchange Trade Funds
If an investment seems risky to you, then Gold Exchange Traded Funds (ETFs) might be the right option. ETFs are a great way to invest in gold without having to physically store it. You can place your gold in an investment portfolio and get the benefits without the storage problems. To cash out your ETFs, you’ll receive a cash equivalent for your investment.
Gold ETF (exchange traded fund) offers investors an easy way
to invest in gold as the price of the ETF unit will track the prevailing gold
price closely. The transparency offers investors more confidently and there is
really little skill involved here. The low charges make it an additional bonus
as you hold gold in the ETF. No storage risks and everything looks great. Is it
really so? Again, I will like to highlight on one risk known as liquidity risk
that in the event of a world crisis, can you dispose your unit at a fair price
if you need the money? In a gold fund, you can be sure that the fund manager
will find the cash to redeem your units but an ETF functions in a free market
where there are willing buyers and sellers
Gold Miner Stocks
For those of you who don’t mind a few risky investments, then consider Gold Miner Stocks. They trade within a broader market, which means they are riskier. You won’t get a secure backing for your physical gold. You are investing in a gold mining company instead of the physical result. Do some research on inventory and management before investing.
Gold Exchange Traded Notes (ETNs)
ETNs are a combination of bonds and gold ETFs. Value is based on the market index and is not based on physical gold. While it is a big risk, the payoff can be huge if you are willing to take the risk.
Gold Accounts in Banks
The units in the gold accounts in the banks are backed up by physical gold held in the banks and the banks will give the assurance that you can convert your gold back to cash anytime. The only disadvantage is that the fees for such services can be as high as 1 percent each year and over the long run, you may be making your bank richer than you. In another worst case scenario that the bank collapses, it will definitely be a challenge getting your gold back.
For the passive investors, you may like to consider buying into gold funds but do note that these funds usually invest in companies that are involved in gold production. This means that you are also investing in the management of these companies placing faith that they are upright. Gold funds offers diversification to most investors and is a lazy way to gain exposure to different gold companies all over the world. Of course, you will have to factor in the management fees as well as the possibilities that the under performance of the fund managers.
Make gold work for you with these gold investment options.