The best ways to invest in gold depends on the investor’s outlook for the future of the economy. However, a diversified investment in the many facets of gold is the best way to go. Unless the investor expects an imminent collapse of the U.S. and world economy, the funds should be placed in different types of investments. Start off with a maximum of 10% of available funds for investments placed in gold.
Types of Gold Investments
Coins which are marked clearly are a good way to start an investment. Many nations mint investment grade gold coins, such as Canada, Mexico and the famous Krugerrand of South Africa. Gold is now over $1100 per troy ounce and a coin purchase a month will get those with limited funds started.
Gold bars, obviously small because of its high cost can be purchased. Both these bars can be kept at home if that is the preference, though this will entail some security measures like a good safe. The bars are also assayed for your protection. They can be stored for you and at times will take long to sell, with a commission attached.
Investing in equities will give the investor ownership in gold producing firms, which might be domestic but often are not. The shares may return dividends that can be reinvested. The portfolio holding these stock should grow over the long haul. The risk here is that physical possession of gold is not an option.
Should the company be mismanaged or nationalized the equity holder will be the first to be wiped out. This is why it is preferable to purchase shares in several different companies. But, since they are in the same sector, the investor will not be diversified and a crash in the gold industry will affect all companies.
Similar to this investment is a mutual fund type of investment. It is called a gold exchange traded fund. It functions like a stock mutual fund and baskets of different company stocks are owned. The advantage here is that they can be bought and sold easily. They are very liquid.
Invest in All Aspects of Gold
The smart investor will buy some coins and keep them close by. This same investor will buy some gold ETFs and equities. Although gold will probably be going higher, all money should not be put in one sector, namely gold related investments.
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- Buying Gold With Gold ETF’s
- Gold Investing: Basic Tips and Suggestions
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