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6 Different Ways to Invest in Gold

6 Different Ways to Invest in Gold
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By    |   Thursday, 07 September 2017 01:27 PM

Owning gold seems like an exciting venture to the novice investor as well as a secure investment for protection against inflation or other economic uncertainties in anyone’s financial plans.

What does one do to own a piece of this precious metal? Fortunately, there are many ways to take part in the gold rush for beginners and experienced investors. Some approaches are riskier than others and depend on how comfortable a person feels with each method.

Here are six different ways to invest in gold:

1. Physical gold — Investors can purchase gold coins or bullion bars, storing them for security in safe-deposit boxes, concealed locations in the home, or in storage facilities offered by companies worldwide. Prospective buyers should do the necessary research to find reputable dealers, Bankrate points out. Authorized dealers of coins can be found on the U.S. Mint website. Commissions or premiums apply on purchases. Coins are often based on collector value prices. Gold bars, based on market value, are sold from an ounce or less to several hundred ounces.

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2. Gold mining stocks — Some investors buy gold stocks as a way to help diversify a financial portfolio. Owning stock in companies that mine and sell gold isn’t the same as having the actual gold in hand because share pricing is subject to operating costs of the company. Sometimes the investments outperform physical gold prices when gold rises significantly, according to the Capital Gold Group.

3. Gold exchange-traded funds — Gold ETFs are similar to mutual funds, holding many gold stocks instead of one, so there’s a wide range of investments in each fund. ETFs are available for bullion, mining, and physical gold companies. Management fees are less expensive than with mutual funds, but trading fees apply. The funds are purchased and sold like stocks with prices changing during the day.

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4. Gold mutual funds — Unlike ETFs, these funds are bought and sold through mutual fund companies or brokerage firms. Annual management fees for mutual funds are usually more expensive than fees for ETFs, but gold mutual funds have more hands-on management as fund managers buy and sell gold stocks to get the best possible returns for investors.

5. Gold options — For investors with more trading experience and willingness to take risks, gold options allow investors to consider buying gold before an expiration date, the Option Guide explains. Traders buy call options if they believe the price of gold will rise. Investors buy put options when they think the prices will drop.

6. Gold futures — While options give traders the choice of buying or selling gold at a certain time, futures must be bought or sold by the investor at a specific date. However, futures holders can close their position before the expiration date. Futures offer leverage and flexibility but also involve substantial risks, Investopedia notes.

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Owning gold seems like an exciting venture to the novice investor as well as a secure investment for protection against inflation or other economic uncertainties in anyone's financial plans.
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Thursday, 07 September 2017 01:27 PM
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