Gold is one of the most attractive investment options throughout history. Even today, although new investment instruments such as stock exchanges and various assets are traded, the attractiveness of investing in gold has not diminished.
Of course, gold is more of an opportunity to maintain the purchasing power of money than an investment opportunity to earn higher returns from inflation or parallel markets.
Therefore, it is definitely recommended to always devote a part of your capital to invest in this category of assets to moderate the risk of investing in different assets.
In this article, we will introduce you to the methods of investing in gold. In the gold market, contrary to the public opinion that only physical or ornamental gold is considered the method of investing in gold, at present, other tools have been defined that can benefit from price changes of this precious metal.
Should we invest in gold or not:
As mentioned, we recommend choosing gold as part of your investment; this asset generally maintains your purchasing power while benefiting from the global dollar and ounce fluctuations, and Although we do not expect higher returns from parallel markets (especially capital markets in the long run), we expect it to maintain investor purchasing power under a relatively low-risk investment and moderate the total risk in your investment.
This post contains affiliate links. Please please read my Disclaimer for more information.
How to invest in gold:
You do not need to buy jewelry or 400-ounce gold bars to have this precious metal. Here are some top ways to invest in gold.
· Buy gold ETFs:
The same is true for gold, as stock exchanges (ETFs) is the easiest way to invest in stocks. Just like stock-based ETFs, gold ETFs represent the physical gold you buy stocks.
These funds can be traded like stocks and have the advantage that most large brokerages today have waived their trading fees in these funds. Because these funds turn a physical asset into a paper asset, they can easily be held in your portfolio along with other assets.
ETFs are a good way for a beginner to invest in gold, and they are traded through major brokerages. An ETF Gold has the advantage of giving the investor indirect physical ownership of the gold, which is less risky than other options.
The largest gold ETFs is the Spider and I-share Gold, although there are others.
· Trading Bonds (ETN):
ETN is a debt instrument related to basic investments. At ETN Gold, this underlying asset is gold, as you might have guessed. You will have a bond in hand for a certain period, after which you will receive a profit or loss based on the performance of your underlying asset (gold).
It is important to understand that gold ETNs are not a direct investment in gold but a gold-related instrument. These bonds can be held for a long or short period, and there is a risk of losing part or all of your capital. For this reason, these bonds are not recommended for people who are not familiar with the gold industry.
· Physical gold bars:
You can buy gold in the form of coins or bullion. In either case, you will pay the price per ounce of gold plus a small fee received by the seller.
Ingots have a lower selling fee because they do not mint like gold coins. Wealthy investors buy bigger bullion, so they don’t have to keep a lot of coins.
Coins are recognizable and portable. It makes it easier to sell them at a private party. The most common gold coins of the American Eagle is the Canadian maple leaf and the South African crown, although, of these three coins, the only pure gold maple leaf is. There are many other coins available.
Coins are available in one-tenth, one-quarter, one-half, and one-ounce scales. But note that lower units are worth more per ounce than one-ounce coins. Some coins may be made from combinations with other metals. But each ounce coin contains a full ounce of gold.
You can buy gold coins through local coin shops or reputable agencies that sell various precious metals. You can take the coins yourself or give them to the seller to keep. If you choose the second method, you will have to pay the cost of storage and insurance annually.
· Jewelry or collectible coins:
Bullion coins are so named because their value depends entirely on their amount of gold. Collectible coins may contain large amounts of gold, but their value comes primarily from their scarcity.
Following the legalization of gold coins in 1933, the US government decommissioned millions of gold coins and began smelting them to store gold bars. As a result, US gold coins minted before 1933 and other countries’ coins have become scarce and collectible, so the value of their collection has grown. Coins that are rarer have a higher value.
For example, a very rare gold coin can be worth hundreds of times more than its ingot value. Surely you can choose to keep gold in the form of a collector coin. But you should know that collectible coins are more related to art than gold.
Like many people in developing countries, you can earn gold by buying jewelry. But most jewelry is not worth the real investment. For example, most jewelry made in the United States is 14 carats. It means that the metal contains only 60% gold, and the rest is sourced from other alloys. Second, jewelry is very expensive to make; you may pay $1,000 for a piece of jewelry when it does not contain more than $100 in gold.
If you are interested in jewelry, you can buy it but do not look at it as an investment.
· Gold mine shares:
Buying gold mining stock is not investing directly in gold but investing in gold mining companies. In general, mining stocks are less stable in value than gold bullion itself because they are largely influenced by other factors that determine each stock’s value.
Although the argument that gold and stocks are moving in the opposite direction is questionable, there is no doubt that gold has repeatedly proven to be a safe-haven asset in the midst of crises. In this article, we look at how to invest in gold. If you have experience investing in gold, share it with us.
“If you have any feedback about how to invest in gold that you have tried out or any questions about the ones that I have recommended, please leave your comments below!”
NB: The purpose of this website is to provide a general understanding of personal finance, basic financial concepts, and information. It’s not intended to advise on tax, insurance, investment, or any product and service. Since each of us has our own unique situation, you should have all the appropriate information to understand and make the right decision to fit with your needs and your financial goals. I hope that you will succeed in building your financial future.