How to invest in gold
Considering investing in gold? Here's an explanation of the best ways to invest in gold. Explore more about gold bullion, gold funds, and more.
Investing in gold sounds simple, but there are several different options available. Their suitability will vary from person to person, depending on what they hope to get out of it and how much they are willing to invest.
Despite so many changes in the market over the last few years and all the emerging digital finance trends, gold remains a firm favorite with investors around the world. If you are wondering how to invest in gold, here are a few different ways you can get started.
You can buy gold bullion
If you want to keep things simple, you can invest in the physical commodity of gold itself. Gold bullion is generally available in two forms: coins and or bars. You can buy these from a brokerage, a bank or from someone who deals in precious metals. One of the biggest advantages of buying physical gold bullion is that it offers security, but you will need to figure out how you are going to store it. If you want to invest in gold without the hassle of storage, you could invest in an unallocated gold account, which means that the bank would own the asset but would pay you its value when requested.
You can buy mutual funds or exchange-traded gold funds
When investing in gold, buying gold stocks could be a much better fit for you if you don’t want to deal with the ownership of the physical product. One of the most popular options is investing in exchange-traded funds (otherwise known as ETFs), which are much more diverse and offer greater liquidity than looking after a stock of bullion.
The ETFs include the likes of the renowned SPDR Gold Shares. Each stock that it offers is the equivalent of the price of a tenth of an ounce of gold. Other options allow you to buy stocks in funds tracking refining and mining companies. It goes without saying that you would be looking at more volatility in gold prices if you take this path, but the flexibility is so much greater.
You can buy gold futures options
Speaking of volatility, buying gold futures options is considerably riskier if you don’t have a lot of experience in investing. However, if you are confident and you know what you are doing, this could absolutely be the best choice for you.
When you set up a futures contract for gold, you are agreeing that you will buy or sell that asset by the agreed date or time. You are bound by this agreement, and it does not matter if the price is lower or higher than it was when you handed over your investment. Gold future options will need to be bought through an account at an online broker so you will need to set one up if you don’t have one already, or you could go through a traditional broker that deals in them. This is not an option that we would advise for a passive investor as you will need to keep an eagle eye on the market’s performance.