A Guide to Gold Investing
Looking at historical records, Gold is one of the only forms of money that originated thousands of years ago and still has value today. This is a strong indicator that it will continue to increase in value when other commodities and currencies fail. Gold provides more financial insurance than other investments, such as real estate, because it is a universal form of money that can be held and protected. For anyone trying to become more familiar with Gold investing, here are the most common ways to get started.
Types of Gold Investments:
- Physical Gold
- Gold Bullion - When you buy bullion, you get the actual metal to hold in your hands. Typically sold in the form of bars, rounds or bullion coins, you are in charge of storing your Gold in the location of your choice and selling it or trading it as you see fit. This is a popular option for those who want to physically pass their Gold investments to heirs.
- Collectible Gold Coins - Collectible Gold coins, sometimes referred to as numismatic coins, are actual currency minted by government institutions and designed for circulation. Typically older and often hard to find, Gold coins carry similar value to bullion in terms of Gold content but may also carry additional premium based on rarity and collectibility. This type of Gold investment is preferable to people who enjoy history or have portfolios that include antiques and works of art.
- Gold Accounts - With an allocated Gold account, a bank will take your money, purchase real Gold and store it in a secure location until you are ready to sell. With an unallocated Gold account, the bank will invest your money in Gold but will not obtain the actual metal for storage. When you are ready to cash out, the bank will return your money based on the current price of Gold compared to when your investment originated. Investing in Gold accounts is a good idea for people who want the security of investing in Precious Metals without being accountable for physical possession.
- Stocks and “Paper” Gold
- Exchange Traded Funds - The investor buys securities on Gold rather than Gold itself. Securities give you ownership over the changes in the value of the price and you make money when the price of Gold goes up. Examples of common Gold stocks include mining companies, commercial mints and publicly held companies that deal in Gold.
- Futures Contracts - When you invest in futures, you purchase a contract for a commodity at its current value with a fulfillment of the goods at a later date. Instead of exchanging actual Gold, you profit on the difference between what you expect the price to be and what the actual future price turns out to be. If you think the price of Gold will go up in a few months, you purchase Gold futures. If you own futures and you think the price will go down, you sell Gold futures.
Bullion coins are excellent for beginners wanting to own investment-grade Gold with a small amount of upfront cost. After you become more comfortable with the process of buying and selling Gold and have increased your money through smart investments, you may want to venture into bullion bars, a full collection of numismatic coins or using the proceeds to open a Gold Account.
If you choose to buy actual metals and have them physically delivered to you, consider the best storage options for protection from theft and environmental damage. When buying Gold stocks, it is imperative to research the companies behind your investment. As long as your stocks are directly tied to companies involved in the mining, manufacturing and distribution of these Gold and other Precious Metals, your investments will likely pay off when the price of Gold increases.