It’s hard to find safe investments these days, especially with the economy always on edge. A classic safe-haven investment throughout history has been precious metals, or more specifically, gold. But there can be drawbacks to investing in gold and there are multiple ways to do so. The following article will cover all the different ways that you can invest in gold.
Ways to Invest in Gold
Buying gold isn’t quite as straightforward as it sounds as there are several different ways that you can choose to invest in gold. You can purchase gold in its physical form, add gold ETFs(Exchange-Traded Funds) to your portfolio, or buy gold certificates through a bank.
Buying Physical Gold Bullion
One of the more popular ways to purchase gold is to buy it in its physical form. Buying physical gold is considered the best and safest way to purchase and own gold. Gold has different physical forms such as coins, jewelry, and bars. If you’re looking to invest in physical gold, buying bullion is the best option. For smaller investments, buying gold coins are great due to the lower investment cost and smaller size. For investors looking to add a large tangible asset to their portfolio, gold bullion bars are the perfect fit. However owning a large amount of gold is risky, you should keep such items in a safe or a bank safety deposit box. Most investors say you should devote at least 10% of your portfolio to gold.
Buying Gold Certificates
Another simple and safe way to invest in gold is to purchase gold certificates. A gold certificate is a certificate of ownership that a person carries instead of handling the gold themselves. It allows investors to buy and sell the security without actually dealing with the gold. Investing in gold certificates is very safe because you have ownership of gold that is safely locked away. These certificates are issued by financial institutions who store the gold for you. Typically they require minimum purchases and have a few fees on top of that. You have to pay to purchase the gold, pay for the certificate, and pay when you want to sell. It typically adds up to around 3% of your total transaction. Investing in gold certificates is simple, you can buy the gold at the current spot price, and you typically don’t have to pay a storage fee.
Just make sure that you understand the difference between unallocated and allocated gold certificates. Unallocated gold certificates don’t guarantee an equal exchange for the gold if there’s a run on the bank’s gold on deposit. Allocated gold certificates on the other hand are correlated with specific numbered bars.
Buying Gold Exchange Traded Funds
Exchange Traded Funds are another way to invest in the value of gold without purchasing it physically. ETFs are investment funds traded on the stock exchange and are similar to stocks. The great thing about ETFs is that they are easily bought and sold; you can perform these transactions as long as the stock market is open. Although investing in ETFs is easy, it is just as risky as investing in stocks. The share price fluctuates as the price of gold changes, which is very often. But because it is traded in the market environment an ETF is quick to buy or sell if needed.
Buying Gold Safely
Like any big purchase, you should do plenty of research before making your first gold purchase. Whether you decide to buy physical gold, a certificate, or an ETF; you should do plenty of research on the seller. When buying from a business always check their Better Business Bureau rating. See how long they have been operating, and if anyone has issued complaints against the business. Always be cautious when buying physical gold and make sure you are up to date with the current spot price of gold. The price of gold changes constantly so make sure you are dealing with a professional dealer that sells based on the current price.
As you can see there are several ways that you can invest in and buy gold. You just need to make sure that you do your due diligence when deciding which type of investment is right for you. And as with any big investment, make sure that you deal only with reputable businesses and institutions.