To protect your assets during economic turmoil, some experts recommend diversifying your portfolio with a cautious amount of precious metals. Gold is considered a fairly safe wealth storage vehicle, as it’s never completely lose all value — unlike most historical currencies and stock shares. As the economy declines, the value of gold typically rises. Some gold investments are safer than others; however, most gold investments are relatively safe.
Here are six gold investment options available to investors.
Gold bullion is the technical term used for investment-grade bullion. Investment-grade bullion is available in 22 karat or 24 karat bars or coins, but is not considered legal tender. To invest in gold bullion, contact a private dealer, gold dealer, Swiss bank or coin dealer to purchase the desired amount. Typically, investors will be charged 1% to 3% over market price of gold.
To reduce the risk of theft from a home or office, many investors opt to store their gold investments at an off-site facility. Safe options for gold storage may consist of an off-site vault, bank or other vendor, such as BullionVault. BullionVault is open 24 hours per day and seven days per week.
Another way to invest in gold without physical possession of your investment is gold mutual funds. Mutual funds may consist of gold mining securities, ETFs, futures and stocks. The entire fund is monitored for progress. Mutual funds provide investors with an overall view of the state of the gold market. Experts advise investors to consider turnovers, expense ratios, net asset values and fund loads when investing in mutual funds. Gold mutual funds will protect your assets. However, they are volatile enough to yield gains on the initial investment.
The share price of gold mining companies often indicates the value of gold in the market. However, this is not always true. The value of gold and the share price in a gold mining company may vary significantly in some instances. Since gold mining stocks are more volatile than other investments, investors may achieve greater returns with gold mining stocks. Investing in gold mining companies is often an excellent way to invest in gold without physically taking possession of the gold assets. Of course, gold stocks take on a considerable amount of risk.
When investing in gold futures, investors are required to acquire a contract to purchase a pre-determined amount of gold on a particular date. The actual exchange of gold will not take place. However, investors will profit based upon the difference of the price when the contract was made and the date that the contract takes effect. To yield a gain, the investor’s gold contract price must be lower than the price when the contract takes effect. Otherwise, investors will suffer a loss. Investors must understand the behavior of the gold market to make accurate and profitable predictions.
Rare gold coins and gold jewelry are another method of investing in gold. Both gold jewelry and gold coins should be in excellent condition in order to retain their value over time. A coin’s or jewelry’s value increases as their rarity or historical relevance increases. Antique and modern jewelry are considered sound gold investments. Experts can give advice regarding which gold coins or gold jewelry will gain the most value over time.
Note: Beware of gold dealers who sell rare coins while talking about why gold bullion is a good investment. Gold bullion and rare gold coins are completely different investments, and the same reasons for buying simply do not apply. Rare gold coins should be seen as collectibles and art investments, rather than straight up gold investments.
In the end wealth building requires active research. This should just get you started learning about gold. Each one of these investments are completely unique and should be exhaustively researched on its own merit. Good luck!
Photo by Giorgio Monteforti.
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