Popular Ways to Invest in Gold

There are many different ways to invest in gold. Some are easier than others, and several of them are described below. You can invest directly or indirectly in the precious metal. If investing directly, you can physically take delivery of it or allow someone else to store it for you.

Indirect Investing – Stocks

The stock market mostly offers trading of companies, so gold cannot be directly traded here. However, there are companies and funds that are in this industry, such as mining companies. The profits of these companies are directly tied to gold prices, so their stock prices react accordingly, allowing investors to participate in the price fluctuations of the precious metal. The gains and losses are often much larger, percentage-wise, than those of the physical metal prices. Some related symbols are GOLD, NEW, and RGLD.

Indirect Investing – ETFs

Exchange Traded Funds are funds that trade just like stocks but they trade on the stock market. One popular ETF that attempts to track gold prices has the symbol GLD. It makes it easy to invest or day-trade gold prices as they go up and down.

Direct Investing – Physical Ownership

The most basic form of investing is probably ownership of some physical amount of gold, whether it be coins, jewelry, bars, or other forms. Jewelry can be purchased at many retail stores and pawn shops. Coins can be purchased directly from government mints and coin dealers. However, gold bars or “bricks” can be more difficult to locate, especially in America. They are more common in European countries such as Switzerland. The standard bar is the 400-troy-ounce Good Delivery Bar, which is over 27 pounds. When the current price is $1,000 per (troy) ounce, each bar is worth $400,000, putting it out of reach of most investors. Additionally, in order to maintain the highest value of the bars, they must be stored in a reputable facility, usually with a minimum of fifteen bricks! The good news is that smaller amounts are available for investing.

Direct Investing – Electronic Ownership

Physically owning, storing, protecting, and transporting significant amounts of gold can be expensive and risky. That’s why many investors choose to have their investments stored at a secure facility. One popular company is BullionVault, and they make it easy to buy and sell as little as one gram at a time, charging a small monthly fee for storage. There are more and more companies and banks that are offering similar services, making it faster and simpler for smaller investors to trade the precious metal in reasonable increments.

Direct Investing – Electronic Trading

Many popular foreign currency exchange (forex) brokers are now offering the trading of spot metals such as gold and silver, making it as fast and easy as trading the Euro versus the U.S. Dollar. One example of the symbols used is XAU/USD. One of the top brokers is Forex.com. According to their site, “Spot gold and silver trades globally in an over-the-counter market and prices float freely based on supply and demand. The spot price is the price quoted for the metal to be paid for (including delivery) two days following the date of the actual transaction (also known as the settlement date).” The minimum amount of cash required varies at each broker, but $1,000 is common and some go as low as $250 or $25.

Source by Nicholas Swezey

Popular Ways to Invest in Gold