Gold is one of the most preferred investment options. It has a low correlation, favorable liquidity, and a proven track record for returns. Although not all investors consider gold a good investment, it is what everybody turns to as a safe haven when the economy is in turmoil. If you’re considering getting gold as an addition to your investment portfolio or preserving your net worth and value, there are several ways you can go about it.
Buy Gold Bullions
Bullions or gold bars are popular among people looking to buy gold. The bars are sold in grams or ounces, and the prices vary depending on the purity and the manufacturer. Investment quality gold bars must be at least 99.5% pure gold, making it easy to store the bars in a gold IRA, easing the stress of storing the gold once purchased.
You can buy gold bullions from dealers or online sites like American Precious Metals Exchange (APMEX), JMBullion or SD bullions. You can also purchase gold from individuals, but you should tread cautiously. When buying gold bars, look out for the delivery and insurance fees which can be significant.
Gold coins come in two forms: collectable coins and bullion coins. But primarily they are collectable coins. That means you will probably pay more for the gold coins than you would for the same amount of gold in bullion form. Popular gold coins include Gold Eagle or Canadian Maple Leaf.
When buying gold coins, remember that coins have a lower gold content than a gold bar. In most cases, a coin is 91.67% gold. The rest is copper and silver. The upside with gold coins is they are easier to store, and because they are collectables, they might increase in value over time.
You can buy gold coins from pawnshops, individual sellers, and dealers. You can also purchase gold coins from online marketplaces but only go through dealers listed in the U.S Mint database to ensure you don’t want money on forgeries or coins with lower purity than indicated.
If your intention is not to purchase physical gold, gold futures are an excellent option, especially for investors speculating on the price of gold rising or falling.
Gold futures give you the added advantage of leverage. You can own a lot of gold futures for a relatively small sum of money. If your speculation of the futures is accurate, you stand to make a significant profit in a short amount of time. Gold futures are ideal for seasoned investors who understand the market and factors that can move the market. To buy gold futures, you need a broker that allows futures trading as a starting point. Not all the major brokers provide the service.
Gold Mutual Funds
Investing in gold mutual funds means you own shares in various gold-related assets. You can own gold in companies that mine or process gold. However, you won’t own actual gold or individual stocks. Gold mutual funds or exchange traded funds have more liquidity than physical gold and are more diverse than single does. Going for gold mutual funds comes with some legal protections. However, some funds carry some management fees.
Gold mutual funds and Gold ExchangeTraded Fund (ETF) are similar, in that they allow you to invest in gold without buying the actual physical gold assets. EFTs also have certain legal protections.
Some leading gold mutual funds and EFTs include Invesco DB Gold Fund, Franklin Gold and Precious Metal Funds and iShares Gold Trust.
Depending on your long-term and short-term goals, there are multiple ways to own gold. Physical gold is the best option for long-term investors not worried about liquidity. For short-term investors looking for liquidity and quick disposal, mutual funds and EFTs are the best options.