4 Best Ways to Invest in Gold

Thursday, December 10, 2015, 6:00 AM | Leave Comment

It is no longer news that the world is sitting on a keg of gunpowder as mounting tensions and apprehensions raise the odds of global socio-economic and political crises.

The U.S sits on a mountain-high pile of debt, terrorists are becoming bolder, Russia is threatening to go an offensive against Turkey, China undermines the West at every opportunity, and Africa remains a black spot on the map.

The volatility in the world has increased the safe-haven status of gold and many folks now look for safety in the yellow metal.

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The allure of the yellow metal is increasing because its value tends to remain intact in the face of increased volatility in the stock market.

For one, the value of gold is immune to the scheming of banking and monetary authorities.

More so, the value of gold tends to increase when global tensions are high because it is a universally accepted store of value.

If you are interested in investing in gold, below are four cool ways to buy an active interest in the yellow metal.

  1. Paper Gold

    You can invest in gold without actually laying had on the physical bullion by buying paper gold.

    Paper gold works in the form of gold receipts, which can be redeemed for actual physical gold if you so desire.

    The concept of paper gold can be traced a practice of 16th century goldsmiths who usually store gold for their clients.

    The goldsmiths usually issue a receipt to the client as a proof that he indeed has gold in storage; the note also provides clarity on the value of the gold.

    When you buy paper gold/gold receipts, you are essentially buying gold without bothering yourself about the storage and security of the bullion.

    The gold bar still stays in the possession of the mint that issued the receipt but the gold receipts locks down your ownership of the gold.

    Many government mints have stopped selling gold to private buyers, but you can still buy paper gold from licensed and authorized private gold “minting” firms.

    Some of the private mints also have electronic tradable gold receipts that are backed by the physical gold in their vaults.

  2. Exchange Trade Fund (Gold ETF)

    You can invest in gold without buying physical gold or buying gold receipts if you choose to invest in gold ETFs.

    A gold ETF is more like a basket of securities that provides exposure to gold at a fraction of what it would cost you to buy gold bullion bars.

    Gold ETFs can be bought and sold on stock market exchanges and the performance of the ETF often tracks changes in the price of gold.

    Hence, in the basic sense, gold ETF should record gains in line with gains in gold prices.

    Some gold ETFs are leveraged to provide you with a multiplier effect on your investments.

    For instance, the ProShares Ultra Gold ETF provides 2-times long exposure on the price of the gold bullion.

    The Goldcorp ETF (GG) provides 2-times short exposure on the price of gold.

    It should be noted that investing in gold ETF is a form of derivative trade in gold; hence, you only own the ETF security but you do not own the underlying gold bullion and you can’t redeem physical gold with your ETF investment.

  3. Physical gold

    You can also invest in gold by buying physical gold in the form of gold coins, gold cubes and gold bars.

    Buying physical gold gives you a tangible proof of your investment that you can keep in a vault at home or in a bank somewhere.

    Physical gold can be a valuable store of value because of its small compact form.

    More so, the size of your gold investment remains intact irrespective of fluctuations in its value – 1kg of gold today would still be 1kg of gold in the next 10 years irrespective of changes in the price of gold.

    You can buy Bitgold online for a stress-free access to physical gold. BitGold allows you to invest in gold with relatively small entry points.

    BitGold provides an online platform for sending and receiving physical gold – the gold bullion is stored in more than 10 Brink locations.

    BitGold provide users with a secure vault account to purchase and hold gold, the ability to make and receive instant gold payments, and a prepaid card for spending gold at traditional points of sale that accepts all major credit cards.

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    You can also invest in physical gold buy buying gold jewelry – this serves the dual purpose of keeping your money while you adorn yourself in style.

    However, buying physical gold in the form of jewelry might be risky because it attracts undue attention to you – and you might lose the jewelry to burglars.

    More so, you might be forced to sell the jewelry at a loss when you are cash-strapped.

  4. Mining firms

    You can also invest in gold by buying shares in the stock of companies operating in the gold mining industry.

    You can buy a stake in a gold mining stock such as Barrick Gold Corporation (ABX) – the stocks of these firms trade on stock exchanges the prices of the stocks are influenced by events in the gold market.

    You might also set up your own mining and exploration company for a direct hands-on approach to investing in gold.

    You might also choose to buy the stock of firms that provide ancillary services to the gold mining industry.

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