How to Invest in Gold: 6 Gold Invesment Ideas

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 bars

6 Gold Invesment Ideas

Physical Gold

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.

Stored 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.

Gold Mutual Funds

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.

Gold Mining Stocks

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.

Gold Futures

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.

Gold Jewelry/Rare Coins

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.

About the Author

By , on Apr 18, 2013
author
Shaun Connell is a full-time personal finance blogger and student living in rural Arkansas. He runs several blogs on investing and finance, including a daily blog called LiveGoldPrices.com, and a weekly blog called LearnWealthManagement.com. Shaun firmly believes in dividend investing, debt-free living, and long-term financial planning.

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{8 Comments}

  1. Chris says:

    I know that gold hasn’t been one of the most stable investments lately, but it still has apperciated about 500% since 2001.

  2. Alisha says:

    Gold investment can be beneficial if a proper plan on it is applied i.e when to invest and when to sell it, to get maximum profit, this can be possible with proper knowledge on market and skills to do market predictions. But i strongly believe any thing else cannot replace gold in terms of investing on it, as the value of gold is set to increase for sure, we can see from the Central banks stashing gold.

  3. Kelly says:

    It seems like investing in gold seems to be a smarter investment choice than some others. I would definitely choose to invest in gold that was either mutual funds or stored gold. For some reason these seem safer than having gold in your own possession. The note you add at the end also seems helpful, thanks for the tips.

  4. Never knew there were so many different ways that one could invest in gold. I don’t think it sounds like the most solid investment for bad times, but it is definitely interesting if you’re looking for something different.

  5. Gold is an awful investment but a way to preserve wealth.

  6. Wow. I had no idea there were so many ways to invest in gold. I had heard about investing in gold and how it was a good idea from my step father, but I have never heard of all the ways to do it. Great post! Thanks for sharing!

  7. Brian says:

    People also need to be aware than when purchasing a gold ETF, the IRS treats any gains as if you physically had the gold. So you are looking at the collectables tax rate, which I believe is 28%, as compared to the longer term capital gains rate. So in this case you would be better off buying the physical stuff and storing it yourself.

  8. Gold is one of those investments that I feel is pure speculation. Gold has no fundamentals that can be analyzed and produces no cash flows. As a commodity, only 11% of it has any industrial use. Which means that 89% of the gold out there is either in jewelery or sitting in a vault.

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