TYPES OF GOLD INVESTMENT : STOCKS COINS AND BARS
Gold investment is one of the most traditional forms of investment. It is also one of the best investments. Today, many buy Gold as a hedge against inflation because of metal’s stability. However, sometimes, investors go into the gold market without proper investigation. This could lead to purchasing inappropriate gold products.
As an investor, choosing the right gold product is very important. One thing you should consider is the different forms of Gold and which type you are going for. Some gold investment options are;
Gold bullion is one of the most popular forms of direct gold ownership. They can come in one of the two forms below
- Bars: Large companies and organizations usually purchase them. This is because they are large and can’t be kept in possession of an individual. However, it can come in smaller sizes for safekeeping by individuals.
- Coins: This is more common amongst individual investors and small companies. Gold coins are of several ounce forms ranging from 1/10 oz. to 1 kilo. They are usually kept in depositaries of in possession of the investor.
- Gold mining stocks and ETFs
Gold Exchange Traded Funds (EFFs) are investment funds traded on major stock exchanges to track the price of Gold. When you buy gold stocks, you’re not buying real Gold. Instead, you’re purchasing a share in a gold mining company. Investing in these types of companies can be an effective way to profit from Gold. Also, they have a lower risk compared to other investment methods.
Most of the gold production is used to make jewelry. Apart from its gold value, jewelry is valuable for its cultural and aesthetic appeal. In a bull market, their value increases fast and sometimes surpasses the market price of Gold.
It is the opposite in a bear market as they tend to decrease compared to bullions. As an investor, jewelry may not be the best option except you are a jeweler.
Gold Future and Options
Futures are contracts to sell a given amount of Gold on a specific date in the future. In the contract, the investor is obligated to take or make delivery of a particular amount of Gold at a specific date and price.
The investor will pay a smaller amount than the price the Gold is equal to. Options are an alternative to buying futures contracts outright. Instead, the owner has the right but not the obligation to sell an amount of Gold at a fixed price and a particular date.
Large investors and companies that want to have direct exposure to the price of Gold may prefer to invest in bullion. For investors who are more aggressive about Gold, Futures and options is an excellent investment.
Jewelry, on the other hand, is a good investment for jewelers. The security isn’t stable as the difference between most jewelry and Gold of the same value is too high.
However, an average gold investor should consider gold ETFs; it is the safest way to invest in Gold.