How To Invest In Gold: Bullion Coin, Bars, ETF, Stocks, Futures
In order for us to fully understand the purpose of gold, let us look back to the start of the gold market. According to history, though gold's history began in 3000 B.C when the ancient Egyptians started forming jewelry, it wasn't until 560 B.C. that gold began to trade as money. At that time, it was recorded that merchants needed to establish a standard of easily transferred monetary units that would simplify trade. And due to the fact that gold jewelry was already widely accepted and recognized throughout various places of the earth, what seemed to be the answer is the creating of a gold coin stamped with a seal.
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After the advent of gold as money, gold's importance continued to grow. In fact, history has examples of gold's influence in various empires (e.g the Greek and Roman empires) Great Britain developed its own metals based currency in 1066. The British pound (symbolizing a pound of sterling silver), shillings and pence were all based on the amount of gold (or silver) that it represented. Eventually, gold symbolized wealth throughout Europe, Asia, Africa and the Americas
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The reasons for gold's importance in the modern economy centers on the fact that it has successfully preserved wealth throughout thousands of generations. However, the same cannot be said about paper-denominated currencies.
Investing In Gold
There are various ways to invest in gold. Actually, different products can be used to achieve a variety of investment objectives. Investors all over the world are always advised to conduct researches to consider the options available in their market and to know the form of investment that is appropriate to their circumstances. They are also expected to know the nature of professional advice they will require.
As an Investor, you can buy physical gold through coins or bars. You can buy products backed by physical gold, which offer direct exposure to the gold price. You can also buy other gold-linked products, which are directly related to the gold price but do not include ownership of gold.
Furthermore, in recent years, innovation has led to products that offer greater flexibility and accessibility to investors, such as exchange-traded funds (ETFs) as well as additional risk management tools for sophisticated investors, including derivatives and structured products.
Now, as an investor, you should know that the various gold-related investment products have different risk and return profiles, liquidity characteristics and fees. Typically, an asset allocation strategy will consider long-term versus medium-term returns, and how gold investment products perform in positive or negative correlation with other assets.
Let us get them outlined:
Bars and Coins
You can be purchasing gold coins and bars either to store personally, or to be held securely on your behalf by a bank or other financial intermediary. Examples includes Coins, etc
Exchange-traded Funds (ETFs)
Financial products physically backed with allocated gold bullion, listed on a stock exchange, and bought and sold in the form of shares. An example is (GLD®)
Gold bullion stored and managed by a bullion dealer or depository.
Example is the Allocated gold accounts.
Other Gold-linked products
Indirect investments in gold, via financial instruments, without direct ownership of the metal.
Examples is Gold mining stocks.
Other Ways You Can Invest In Gold:
- Gold mining and sale of raw gold: investing in gold exploration and sale of raw gold bar or dust
- Opening a goldsmith centre: providing services of gold casting, molding, purification, production and customization of gold rings, bracelets, neck chains, Apple Iphone, business cards etc.
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When Should I Buy Gold?
The simple answer is 'When you need it.' First and foremost, you need to know that gold itself is wealth insurance. Investors cannot approach it the way they approach businesses in stock or real estates. Timing should not be the most important factor. The first question you need to ask yourself as an investor is whether or not you believe you need to own gold. If you answer that question in the affirmative, there is no reason to delay buying or waiting for when the prices would crash which may or may not appear. Cost averaging can be a good strategy.
How Can The Average Investor Distinguish Between The Good Gold Firms And The Bad?
Before investing in (or with) any establishment, it is required to first check the company's profile before you do business with it. Check the firm's rating and the number of complaints lodged against it (and how those complaints were handled). If you see a firm with A+ rating and they have a consistent record of complaints, this can be a warning sign. This is an bold decision new investors should take, and shouldn't be ignored by you.
Secondly, in the attempt to invest in gold, you need choose a gold firm that has a solid track record. Some experts would recommend that the firms in business for ten years are good- and fifteen years or more is even better. Also, ensure you choose a firm with a commitment to keeping you informed. A firm that is interested in answering your questions now and keeping you informed in the future.
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