7 Ways to Invest in Gold
There are several ways to invest in gold. Up until the start of the current bull market in 2002, it was much more difficult to invest in gold. Since the beginning of the 21st century, buying gold as an investment has been made easy by the Internet and facilitated with the growth of financial instruments.
Let’s review seven different ways to invest in gold and have a careful look to the priority:
- Buy physical gold– this is the preferred method of buying gold as an investment. You have no counterparty risk and low cost of ownership. On the flip side, there is a risk to store the metal. Physical gold is usually bought in the form of gold bars.
- Gold coins – as long as you stick to the widely accepted gold coins, you are fine. Examples of the most traded coins are the South African Kruegerrand, the Australian Kangaroo, the Swiss Vreneli, the Canadian Maple Leaf or the American Eagle. Premiums on some of these coins, but mainly the more unique ones, are usually higher than gold bars.
- Perth Mint – this 100-year old mint is the only government-backed bullion storage facility in the world. It’s located in Western Australia and it fully guarantees your account and physical ownership. You pay a service and administrative fee, but storage is for free and ordering the metal for physical possession is perfectly possible. One advantage is that this gives the lowest risk should confiscation occur.
- Vaulted gold – with the advent of the Internet, you can easily buy your gold online and have it stored for you in special secure vaults. When buying vaulted gold, the service provider usually holds gold bars for you. This option is somewhat related to the previous one, but it is using much more ofthe Internet and you can easily trade. The most known service providers are GoldMoney.com and BullionVault.com.
- Gold stocks – shares of gold and silver mining companies is a much more risky way to profit from the current gold & silver uptrend. It requires thorough analysis. Several mining companies will grow tremendously in value over the coming years, as they have the gold in the ground. But be careful, not all mining companies will have the same bright future. Professional advice is recommended when investing in gold stocks.
- Gold Exchange Traded Funds (ETF’s) – you can easily buy those financial instruments on the stock exchanges. They usually track the gold or silver price. We intend to call it “paper gold” and don’t love them as they are not always backed with physical gold (that’s an issue in case of a collapse of the financial system). We recommend investing your assets only if the ETF’s is fully backed by bullion, like the Sprott Physical Trust.
- Options and futures – of course this is the most risky way to invest in gold. We do not recommend it at all, except if you are a very experienced investor or trader.
Our recommendation for buying gold as an investment is to spread your gold and have a core physical holding (gold bars or gold coins). At the same time, if you have a higher risk investing profile, you may consider investing in gold stocks or trading physical gold with one of the bullion backed ETF’s or vaulted services.
As you can see, there are a number of ways to invest in gold. How you choose to do it is up to you, but your level of experience and the proper research will help dictate the best method for making your investment a success.
If you feel ready to invest in silver, then we recommend you go through the different types of gold investments in trusted companies: buy physical gold (bullion), buy gold coins, invest in one of the gold investment funds or maybe first start with extending your knowledge with one of the gold investment newsletters.
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