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How to Invest in Gold, Beginner Guide

Gold has been a traditional investment throughout history, since it is a precious metal and retains its value even during economic crises such as inflation, currency fluctuations and war. If you have decided to add gold to your portfolio, you should raise your knowledge about gold investing just like any other investments. First of all, gold makes a profit in long-term investment. Gold value always experiences price fluctuations if you check it day to day it is better not to buy it otherwise if you are ready to invest in gold come along with this article. There are 3 types of gold investing including: buying physical gold, buying options and future and investing in gold’s ETFs.

 

Buying physical gold

The physical types of gold to invest are bullion, coins and jewelry. Gold is one of the most accessible commodities to purchase for investors since you can easily buy and sell gold bullions. You can buy them from local collectors but it is recommended to buy them from a reputable, licensed dealer. Investing in physical gold means you will need insurance and a storage also you must pay for them.

Gold bullion

Gold bullion bars are ranging from a few grams to 400 ounces (11.3398kg) bricks. The gold bullion price is high and it is not possible to have a fractional share of a bullion bar despite the gold stock.

Gold coin

Most first-time investors are likely to buy gold coins rather than other types. Price of a coin may not align with its gold price. Some collective coins such as American Gold Eagle and Canadian Maple Leafs are traded higher than the comparable amount of bullion gold. Gold coins also need safe keeping either at home or in the bank with insurance too.

Gold jewelry

You can buy jewelry to wear or buy the one that someone wore but it was damaged then and it is not wearable any more. Buying jewelry is riskier than buying bullion and coin so you should be aware and try to trade it in a licensed dealer. You should be careful to buy jewelry with authenticity since it is important when you resell the jewelry. Also you should care about the jewelry gold purity which is measured by karat and a one with 24 karat means it is 100% pure gold.

 

Buying gold ETFs

The gold exchangeable-traded fund provides much more liquidity than individual gold stock and benefits more in long-term investment. Gold ETFs are commodity funds. Gold ETFs are just like any other ETFs and they consist of several and different holdings that’s why their risk is lower than a specific company stock. You must be aware that you are not buying gold just like gold stock. Which means that the value of the gold ETF does not entirely match up with gold price. Basically the gold stock price rises and falls faster than the gold market price.

 

Buying gold options and futures

Some investors chose gold options to reduce their risks. The gold options provide an option to sell or buy gold at a specific price during a certain period of time which means there are no obligations to do so. while a futures contract provides selling at a set price during a specific time. you pay a premium for options. You can buy or sell whenever you think the gold price is going up and coming down. If the price goes in the opposite direction you have paid for maximum risk by the premium you paid for your contract. In order to buy options and futures you need to have an account in brokerage, you can open an account on online brokerage to start your contracts.

 

Summary

If you want a long-term investment, gold is a good choice. As it was mentioned above gold has retained its value during many difficult financial situations and it is best known as a safe investment. Based on your own preferences you can choose between physical gold, gold ETFs and gold options and future. However, you should consider that physical gold needs storage and insurance while ETFs and options don’t need such things. Generally, it is good to have gold in your portfolio.

Source: forbes.com

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