There are many options available to people interested in investing in gold. Investments can be made by buying and storing physical gold, buying items that represent ownership of the gold, or buying stocks.
7 Ways to Make an Investment in Gold #1 – Gold Coins
The governments of several different countries issue gold bullion coins as legal tender. The price of gold coins is determined by their fineness, or the ratio between the actual content of gold and other materials in the coin. Supply and demand can also affect the price. Common coins include the American Gold Eagle, Canadian Gold Maple Leaf, South African Krugerrand, Australian Gold Nugget, Austrian Philharmoniker, Chinese Gold Panda, British Sovereign, and French Coq Gaulois.
7 Ways to Make an Investment in Gold #2 – Gold Bars
Gold bars are the most traditional form of gold investment and are sought after by many central banks around the world. The bars are available to investors in a variety of sizes, such as one kilogram, ten ounces, one ounce, ten grams, and 100 grams. One of the most popular gold bars is the London Good Delivery bar, which weighs 400 troy ounces. In general, bars have lower price premiums than gold coins, but investors should always be wary of counterfeits. Bars should always be purchased with a certification.
7 Ways to Invest in Gold #3 – ETFs
Exchange-traded funds, or ETFs, trade similar to stocks on major stock exchanges. For gold ETFs, the US Stock Exchange is the most important trading venue. ETF funds buy large amounts of gold and store it. They then issue shares that correspond to the price of one bullion. If prices increase by 5%, individual ETFs would also increase by the same 5%. ETFs allow investors to easily trade and buy in small amounts. ETFs may require a small storage fee annually.
7 ways to make an investment in gold #4 – Certificates
The certificates represent gold ownership without requiring the investor to actually store bullion. Assigned certificates are correlated to ownership of specific numbered bars that are stored in individual banks. However, unallocated gold certificates do not guarantee equal exchanges for bullion if there is a run on the issuing bank’s gold. Certificates are of historical importance in the United States, where they were considered legal tender from 1882 to 1933.
7 ways to make an investment in gold #5 – Accounts
There are five types of accounts: allocated, unallocated, gold funds, electronic currencies and gold accumulation plans. Mapped accounts allow investors to own bars or coins that are stored in a vault, which is managed by a reputable bullion depository or dealer. Unassigned accounts do not represent ownership of specific bars. Gold Pool accounts allow people to invest in very small amounts. Electronic currencies allow investors to make online payments using a currency that is linked to stored gold. So accumulation plans are similar to savings accounts in which investors purchase a fixed lump sum for each month.
7 Ways to Make an Investment in Gold #6 – Derivatives
Derivatives include options, futures, and forwards. These financial instruments can be traded on various exchanges around the world or through private transactions. Gold futures are most frequently traded on the New York Commodity Exchange and Euronext.liffe in the US.
7 Ways to Make an Investment in Gold #7 – Mining Companies
Buying shares in a mining company is another investment option. As the price increases, the mining company’s profits are expected to increase, causing the value of that company’s shares to rise. There is some market volatility associated with mining stocks, but many companies will hedge the price up front to reduce this fluctuation.