Gold is one of the most popular, if not the most popular forms of metal. Experienced traders include it in their investment portfolio because it makes a perfect hedge against inflation. Should you wish to invest in gold, there are a few things to keep in mind, and we will discuss them in this article.
Below are the different ways to invest in gold:
Investing in physical gold
Investing in physical gold can be challenging, especially if you are used to trading stocks and bonds. Investing in physical gold means interacting with a gold dealer, someone outside of the traditional brokerage firm.
It is what many people think about when investing in gold – shiny gold bars locked in a safe. However, the price of gold bullion is high, so only a few invest in them.
There are different types of gold coins available for investment, such as American Gold Eagles, Canadian Maple Leaf, and South African Krugerrands. When investing in gold coins, you have to make sure you purchase from a licensed and highly reputable dealer.
Purchasing stocks in gold miners
It is one of the common ways of investing in gold – buying stocks in gold miners. You are putting your money on companies that mine, refine, and trade gold, such as trade spot gold (เทรดทองคำ, term in Thai). When investing in gold using this route, you have to remember that the share of stock of gold companies correlates with the price of gold and the fundamentals related to the current profitability and expenses of the company.
Investing in gold mutual funds and gold ETFs
Should you wish to take advantage of gold’s long-term stability, it is best to do it through mutual funds and gold ETFs. There are various gold funds to choose from. Some can be passively managed index funds that keep track of the industry trends. You just have to keep in mind that you are not purchasing gold when you invest in gold stocks. What you are buying is a paper backed by the equity of mining companies. It could be in the form of options or futures for physical bullion. What this means is that the value of gold stock may not be the same as the current market value of gold.
If you are a novice investor or a seasoned one and looking for ways to diversify your portfolio and have a hedge against inflation, adding gold to your investment portfolio is a good decision. Gold is one of the stable investment vehicles, and you can greatly benefit from it, especially if you look at it from a long-term perspective. Suppose you are not that knowledgeable in investing in gold. In that case, it is a must to first enrich your knowledge about gold and the different investment methods using such an investment vehicle. By doing so, you will be able to come up with an informed choice and decision, which will benefit your investment portfolio in the long run.