Gold is a popular commodity investment. It’s a great way to diversify your portfolio, earn some money, and hedge against inflation. Many investors see gold as a safe option to invest in because it won’t crash like stocks, and it won’t be affected by inflation.
When it comes time to look for gold dealers or brokerages, you need to know two things. The first is that they’re reputable. There are a lot of scammers in gold investment so it’s important to check out each brokerage before choosing one to work with. Reading things like Monarch Precious Metals review or checking to see if the brokerage is licensed, has a lot of long-term clients, and provides you with good customer service can help prevent you from becoming a victim of fraud.
The second thing you need to know is what you’re investing in. You can invest in gold in a lot of different ways and each one is unique and has its drawbacks, You want to make sure that you know how you’re going to be investing in gold because that will determine who you deal with and how.
Let’s take a quick look at some of the more popular ways to invest in gold.
When people think of gold investing, they think of physical gold which we talk about later. They don’t think about mining stock. Mining stock is just like it sounds. You’re investing in stock from a company that mines gold.
As the price of gold increases so does the mining company’s profit and therefore, their stock will increase. And if the company decides to amp up production on gold, you’ll be getting even more money back in stock.
Since gold is in popular demand and has been throughout time, it’s a safe bet when it comes to investing. The only thing you have to be careful with is knowing the company inside and out. While gold is always in demand, if you invest in a smaller company, they may not be able to produce the same amount of money as the larger companies and therefore be put out of business.
When you’re choosing a company stock to invest in, be sure you choose a well-established, large company. Make sure they have proven profits and gold before you buy into their stock. Don’t let yourself get in bed with a risky company.
Exchange-traded funds, or EFT, can be another great way to invest in Gold. They try to match the price of gold performance minus their annual expense ratio. Expense ratios vary in percentage but they usually aren’t too steep.
EFTs tend to be readily exchanged for cash in comparison to bullion or coins. This means that you don’t have to wait nearly as long as you would if you were selling physical gold. You can trade any day the market is open as you would with stock.
For more information about EFTs, click here.
This is what most people think about when you talk about gold investments. Just as it was satisfying to own gold bars, coins, or jewelry thousands of years ago, the same is true today. A lot of people like the idea of having a physical investment that they can touch or store somewhere instead of something less tangible like stock.
Bullion and coin are the most popular method of investment for physical gold. Bullion is certified pure gold that comes in bars, coins, or ingots. Gold coins are traded all over the world so you can invest in gold coins in China, Canada, England, etc. as well as the U.S. Collectors have a great time collecting different coins from around the world. If you’re interested in collecting coins, here’s a shortlist of the different ones you can collect. https://coinweek.com/coins/coin-collecting-strategies-2/collecting-strategies-financially-painless-way-collect-gold-coins/
There is also gold jewelry you can invest in but this can be harder to get into because jewelry stores mark it up well above market value.
There are a few drawbacks to this type of investment though. When you’re investing in physical gold, you have to rely on the gold price rising. Unlike the mining stocks where the company can produce more gold and therefore profit, you rely solely on the fact that the gold is going to rise in price over time so it can be a little riskier.
You can purchase gold from a reputable dealer. Just be sure to do your research before giving your money away. Like I said in the beginning, scammers are everywhere.
The number one drawback of physical gold investment though is the fact that you have to store it. You can’t just keep a bunch of gold bars in your kitchen cabinet or on your dining room table. Gold should be stored and protected somewhere safe. Finding somewhere to store your gold can be tough but you can find a reputable place to hold it securely.
Futures are speculative guesses when it comes to investing so in Gold futures are you guessing what the price of gold will be in the future. Gold futures give you a lot of leverage so you can own lots of futures for very little money. If the direction of gold rises in the way you believe it to be, then you stand to earn a lot of money through them.
While this all sounds great, this can work against you. If your speculation on where gold will be in ten years doesn’t go the way you think it will, you could lose a lot of money too. Meaning if you think gold prices will go up but they go down, you just lost a lot of money. So, you either have to give more money to keep the contract with the broker or you’ll have to close your futures and take the loss.
Futures can be risky investments, especially if you don’t know much about investing so if you’re a new investor, it might be best to leave these be for now. Try some of the other methods to ease your way into gold and really learn the investment well.