The gold markets beckon investors. And it’s not for nought – the royal metal is a secure way to stay afloat during inflation, when the world’s currencies lose their value. Top advisors advocate for commodities in any portfolio, because they decrease risks.
An individual can invest either directly or indirectly (or both) in gold, in numerous ways, from buying gold earrings to funding mining companies. Of course, all opportunities vary in value and won’t pay out the same.
Let’s start with bullion.
Gold bullion is actual, physical gold. It is any form of pure gold, be it coins, bars or whatever. Large gold bars are quite a challenge for their owner. Firstly, if all your funds are limited to a piece of gold of a large size, your holding is unlikely to produce regular payments. That is, unless you chop off a piece and sell it. Secondly, it’s difficult to find a buyer.
Gold bullion is a headache in terms of storage and insurance. Also, being a direct investment, gold bullion is affected by the dollar. Once the dollar loses its value, so does gold bullion.
Gold coins are much more liquid. In addition to their small size, they are easy to buy. Prices are showcased and available to everyone who is interested. Coins are typically bought through a dealer who earns a commission from each purchase. Don’t chase after rare coins as your possible circle of customers will be limited to collectors only. Instead, concentrate on those in circulation. They are plenty to choose from.
Gold ETFs (exchange-traded funds) are yet another option. Exchange-traded funds are traded just like stocks. Buying into a gold ETF, an investor is entitled to a fixed gold share. This is far more convenient and cheaper than owning a bar of physical gold. Moreover, ETFs don’t charge you sky-high commissions and fees.
Mutual funds are not so cost-effective and often include a variety of other commodities. Still, there are mutual funds that focus entirely on gold. As a rule, they boast low initial investment requirements. Gold-oriented mutual funds operate in different ways. Some of them buy into mining businesses indices, whereas others follow gold prices. Generally, ETFs and mutual funds are extremely good for novice gold investors. They are safe, easy and accessible.