Investing in gold stocks, ETFs, or mutual funds is often the best way to gain exposure to gold in your portfolio. To buy a gold stock or fund, you'll need a brokerage account, which you can open with an online broker (here's a step-by-step guide to opening a brokerage account). You can buy physical gold at retailers such as JM Bullion and APMEX, as well as pawn and jewelry stores. Look on retailer websites to make sure you're paying a fair price for gold.
Check exchange sites to find out what the spot price is and expect to pay a premium of 5% to 8% above the spot price of a gold coin. Buying physical gold bars online is a fairly simple process. A common way to buy gold bars is through authorized online retailers. Look for gold bullion products on reputable retail websites, such as American Precious Metals Exchange (APMEX), JM Bullion, and Wholesale Coins Direct.
Select the gold bars you want to buy by weight, quantity and price. There are a multitude of ways to invest in gold. You can buy physical gold in the form of jewelry, bars, and coins; buy shares in a gold mining company or other gold-related investment; or buy something that gets its value from gold. Each method has its advantages and disadvantages.
That can make it daunting for novice investors to know how best to gain exposure to this precious metal. The right investment strategy will strike a fair balance between risk level and return. Given the many changes brought about by COVID-19, finding a strategy that minimizes risk and maximizes profits may seem more difficult than ever. Fortunately, there are some investments that have performed well throughout history, the best known being gold.
According to The Motley Fool, about half of the world's demand for gold comes from jewelry. With another 40 percent being the demand for physical investments in gold, such as coins and gold bars. Both investors and financial institutions buy physical gold for these purposes and, more recently, exchange-traded funds that buy gold on behalf of investors. The remaining demand for gold typically comes from the medical and technology industries.
Gold bars refer to any form of pure gold, with the most common example being gold bars. Gold bars must be certified for weight and purity and usually have a serial number attached to them for safety reasons. Gold bars can vary in size and it doesn't take much to be considered valuable. Buying gold bars has some drawbacks, as you'll usually want a secure location and insurance to secure the investment.
In addition, gold bars can be a difficult asset to buy and sell, as you must identify buyers ready to buy on whatever size bar you have the asset in. That said, many investors find this method very rewarding and one of the best ways to invest in gold. You may be familiar with the popularity of gold coins from infomercials and other advertisements. This way of buying and selling gold is well known and often more convenient than gold bars because of their smaller size.
Investors can buy gold coins from collectors or private traders and ultimately sell them for profit. Dealers are located in most cities, making it easy to find coins. To make buying easier, gold coins are one of the best ways to invest in gold for beginners. Occasionally, you may come across gold coins that are marked due to their collector's value.
Collector's value can make them more expensive than the real base value of gold. Most casual investors will avoid this and focus on the highest-circulation coins, unless they are also interested in becoming collectors. Some common examples are the U.S. UU.
The Eagle and the Canadian Maple Leaf. Gold jewelry is probably the most bought and sold form of investment in gold, although you may not even think of it as such. In fact, gold jewelry is ideal for beginners because they are very easy to purchase. According to Investopedia, about 49 percent of world gold production is used to make jewelry.
Typically, any piece of jewelry 14k or more is considered an investment in gold. While it's relatively simple to obtain, there are some drawbacks to be aware of. In some cases, gold has a questionable resale value. This means that it can be difficult to identify a buyer and sell your jewelry for a profit.
In a nutshell, gold futures are contracts to buy and sell gold at a certain time. Each contract represents a certain amount of gold and, depending on the specifications, can be paid in an amount in dollars or in physical gold. Gold futures can be very large, making this the most suitable strategy for investors with the capital needed to buy high-value contracts. There are also options on gold futures to consider.
This gives investors the option to buy a futures contract for a pre-set price at a certain point in time. Options can help buyers take advantage of their initial investment, although they are required to pay the underlying value of gold to fully own the option. Both gold futures and options are considered to be volatile, making them more difficult to enter and manage compared to other forms of gold investments. The problem with that, of course, depending on why you buy your gold, is that you can't take physical possession of it (or rather, you can, but it will cost you dearly) and you need to have the utmost confidence that whoever has your gold is holding it safely.
Some retailers consider buying more than 100 gold bars (or 500 gold coins) to be a “bulk buy,” but this will largely depend on the seller. Buyers of gold bars should check websites such as the Better Business Bureau and Ripoff Report to learn more about a gold seller's reputation. Even when gold bars are genuine, seller charges can be exorbitant and buyers may have trouble clearing gold through customs, depending on the quantity purchased. In his book How to Buy and Sell Gold and Silver Privately, Internet marketer and business coach Doyle Shuler explains many of the complexities surrounding taxation and buying gold.
In general, avoid buying gold online through bidding sites; you can end up in a bidding war and paying more for a gold coin than it's worth. Gold is considered a “safe haven” asset because when the prices of other investments, such as stocks or real estate, fall sharply, gold does not lose its value, it can even gain value, as frightened investors rush to buy it. Whether you buy your gold coins in person or online, you don't want to waste money on counterfeits or gold less pure than you're led to believe. Average investors, for example, can buy gold coins, while sophisticated investors implement strategies using options on gold futures.
Options contracts also allow the holder to buy or sell shares of a gold ETF or gold mining stocks at a specific price and date. Of course, instead of investing in an investment fund that combines money from several investors, you could also buy shares of gold mining companies (often called gold stocks) directly. Under a gold options contract, you have an agreement with the option to buy or sell gold if it reaches a certain price on a predetermined date. The best times to buy gold are when concerns about inflation or the economic crisis begin to arise, as gold tends to rise during those periods.