Gold has seen a dramatic rise in its prices in the recent past. Many people are using it as a hedge against the weakening of the dollar, after the recession hit in 2008. While thinking of investing in it, you need to take into consideration its price. Another important rule is to make sure that you never put all your money in one basket, viz. buying gold bars or coins. There are other modes of investment in the form of mutual funds and certificates so that you can create a diversified portfolio. Moreover, you can also opt for gold stocks. The following paragraphs would provide you some of the most ideal ways of investing in the yellow metal.
Traditionally, people have been owning the physical metal as a form of investment. In most countries, gold bars and coins are available in banks from where people can purchase them. They are available in a variety of weights, ranging from an ounce to a kilogram. The price varies according to its weight and purity. Coins are higher priced as compared to bars.
Exchange Traded Funds
If you don’t like the idea of storing the physical metal, you can go for exchange traded funds. These are special types of funds, which keep a watch on the spot prices of the metal, and can be bought and sold in all major stock exchanges. However, their major drawback is the fee charged by the company which issues such funds. Besides the annual storage fees, a commission is also charged on the trade.
Purchasing stock of gold mining companies is another form of investment. As and when the prices of the metal rise, the company’s profit margins improve, thereby resulting in an increase in the stock prices. You can also opt to go for mutual funds in gold, which means buying into mutual funds instead of shares of these companies. However, there are several factors like the number of years a particular company has been into mining, their profit margins, etc., which need to be considered while investing in their shares or mutual funds. Unlike coins and bars, which are considered a safe bet, these stocks are more volatile and pose a higher risk, but the returns are equally high.
Points to Consider
Most major banks around the world sell gold coins and bars, so you can buy it from there. You can also check popular and reputed websites where people buy and sell commodities, but it’s recommended that you don’t use this medium. Coin dealers and jewelry stores sell the metal, so you can go for that too. Buying from such places is quite easy and you don’t need to worry much about the cost factor. It’s comparatively cheaper than other options. While buying coins, make sure that you buy the certified ones which are sealed, or else you may risk buying counterfeits. Moreover, you may be unable to sell it until you make payments for grading and re-certifying them.
As we can see, there are multiple options to invest in gold. As with any other investment, it is imperative to research the product thoroughly before putting in your hard-earned money.