How To Invest In Gold

How To Invest In Gold

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Gold has proven to be one of the most popular and successful ways of hedging against many adversaries and protecting your wealth from inflation, economic instabilities, currency fluctuations, and war, throughout the centuries.

Investing in gold isn’t limited to purchasing physical items such as bars (bullions) and coins. There are other alternatives that you can also consider. For example, you can buy the stocks of companies that invest in gold mining firms, or ETFs that track the price of gold or firms invested in it. Let’s take a look at the different ways to invest.

Physical Investing

If you are accustomed to trading on stocks and bonds via your favourite broker-dealer, you may find it challenging to invest in physical assets. When evaluating whether or not to buy physical gold, you will need to account for certain costs that you may not typically have with other investment options, such as storage, and insurance fees. Now, let’s explore the most common ways of investing in physical gold:

  • Bars (Bullions) 

When we think about buying gold, one of the first things that often come to mind is purchasing those lovely, shiny bars that we keep in our secure vaults. Typically, bars come in various weights from one to as much as 400 ounces, with the most popular ones of one- and 10-ounce bars. When writing this article, the current price is 1925 USD per ounce, which makes investing in gold rather expensive. Unfortunately, buying a fraction of a bar isn’t possible. As a result, when considering purchasing bullions, you need to keep close track of the market price of the precious metal and choose the right moment to invest.

  • Coins

Another option you can explore is purchasing gold coins. The most widely available investable coins weigh one or two ounces; however, there is also the possibility of finding coins that weigh half or even a quarter of an ounce. If the coins you are looking at purchasing are in-demand coins, then their market value can differ from the spot price. For instance, certain coins, such as American Eagle coins, are currently worth 2035 USD per ounce, which, when compared with the current gold price, shows us that they sell at a 5.75% premium. 

  • Jewellery

Some of you may consider purchasing jewellery. Of all of the types of physical gold buying, this is typically considered the most risky. Apart from price fluctuations, it would be best to consider the authenticity of the piece that you’re purchasing and if it’s best to test for real gold. It might also help to consider the quality and the purity of the piece that you are purchasing. All these factors will affect the price of the jewellery when you decide to resell it. If you are going down this road, you should seriously consider dealing only with reputable dealers. 

Buying the stocks of companies invested in gold mining firms

A trendy way of investing by buying the stocks of companies that specialise in mining or refining and trading gold. This type of diversification is particularly appealing to investors who are familiar and comfortable with stock trading. 

For those of you who are just starting out with stock trading, it might help to keep in mind that, while the price of gold may influence the stock price,  there are also many other things you may need to consider before investing. For example, it might help if you considered the company’s profitability, social responsibility, the overall expense structure, investments and other fundamentals. In case you are wondering which stocks to consider, here is a link with some of the largest and most capitalised companies dealing with gold.

Investing in Gold ETFs and Mutual Funds 

Another way of investing in gold is through ETFs and Mutual Funds. Both of these can provide you with exposure to precious metals. They can also offer a great deal of diversification and reduction of risks and some costs. When analysing an ETF or Mutual Fund, you might want to consider how the price of the ETF or Mutual fund is determined. For instance, some of the funds invest directly in physical gold and deposit receipts, meaning that their stock price tracks the price of physical gold. Others, on the other hand, invest in companies that deal with gold; or in other words, the fund invests in a basket of companies that specialise in refining, mining and trading physical gold. 

Final Thoughts

As you can see, there are many different ways to invest and to benefit from long-term increases in its value. Holding gold investments can be a great way to diversify your investment portfolio and to grow your long-term wealth. As with any investment, it is always best to seek advice when needed. To learn more about investing, feel free to check out our blog. To find out more about our investment services, feel free to contact us for more information.  

Risk Warning: The information in this article is presented for general information and shall be treated as a marketing communication only. This analysis is not a recommendation to sell or buy any instrument. Investing in financial instruments involves a high degree of risk and may not be suitable for all investors. Trading in financial instruments can result in both an increase and a decrease in capital.

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Risk Disclaimer: The value of investments and the income from them can go down as well as up and you may not recover the amount of your original investment. Past performance is no guarantee of future success. Seek independent financial advice if necessary.