|By: Sha - at February 8, 2013
8 Ways of Investing In Gold
Why Should You Invest in Gold?
Today, hundreds of
thousands of investors and people in general are turning to gold to protect
their assets and investments. The word economy is still going through a
turbulent time. The credit crunch, recessions, ever unstable stock and real
estate markets all have forced millions of investors from across the globe to take
further steps to protect their assets and financial security. However, a lot of
investors are more concerned about how much is gold worth per ounce or gram than
what gold's future looks like. Many investors have turned to gold
as a last resort to protect their assets and the financial future for their
family or children. Traditionally, gold has been a very precious metal and has
been used for thousands of years as an international medium of currency or
exchange. The recent hike in prices of gold has proved again how powerful
gold can be as part of a financial fund and as a precious commodity. In truth, many of the major
economies of the world are moving towards a genuine gold standard by
diversifying out dollars and euros to boost their holdings.
Ways of Investing in Gold
There are broadly two ways you can invest in gold. The first option is to
hold paper gold represented in papers and the second option is to hold physical
gold in the forms of bullion, bars, and coins. However, there are various
options when it comes to investing mentioned below:
8) Gold Bullion
You can buy gold in various forms such as coins, bars and jewelry at various
prices. You can deposit gold in your own home or store it with a bank in safe
deposit boxes. An easy way to buy and sell gold is via your local jewelry
shops. There are many companies selling gold. You, however, have to understand
what type of gold you should purchase based on your requirements. For example,
if you purchase smaller gold bars then you will have to pay higher premiums. You
should try to buy gold as close to the market or spot price as possible to avoid
big premiums. If the premium is higher, the higher the gold has grow in
make profit from your investment in gold.
7) Gold Bars
Gold bars can be purchased to open
gold IRA account or other related accounts. Gold bars come in metric sizes and the prices of each bar depend on a given
day’s gold price. The premiums of manufacture and marketing also add to the
value or price of gold. Also, the smaller the gold bars, the bigger the premiums
are. A lot of investors or people in general also keep a large volume of
physical gold bars.
6) Gold Coins
Gold coins are universally recognized and can be sold at competitive prices. Gold coins are available in various sizes and produced in large numbers, which
can be resold easily too. People or investors can keep the physical gold coins
or buy them to invest in gold IRA accounts.
5) Gold Jewelry
In many countries jewelry is considered as a valuable asset. Traditionally
many people keep jewelry as a sign of their social status or just to save it
for a rainy day. The demand for gold jewelry is increasing every day.
4) Gold Mining Stocks
Investing in gold mining stocks is popular for many investors. You basically do
not invest in paper gold or gold bars or coins, but you invest in gold mining
companies. You make money when the stock prices of these companies go up. The
value of stocks increases when the price of gold increases or appreciates. However, big investors can take the best advantage
by investing in gold mining
3) Gold ETFs
Gold ETFs (Gold Exchange Traded Funds) allow you to own gold without actually
storing the physical gold. ETFs are essentially funds like shares which are
traded on a stock exchange. Investors track gold’s spot price which fluctuates
based on the performances of gold. Investors and traders can use gold also to
hedge other gold positions like share or stock markets.
2) Gold Options and Futures
Gold options and futures are risky markets where investors can hold the shares
up to a certain period of time. If you are buying gold options then you are
actually betting on the prices of gold going higher or lower in a given time in
the future. Options and futures contracts have an expiration date. So you hold
your investments or bets in gold for a certain period of time. For example, if
you are speculating that gold price will go up in October 2013 then you would
probably buy an October gold options or futures contract which will expire in
September 2013. You will have more than 6 months to hold the position and make
money when the price of gold goes up. However, you can end up losing all the
money if markets go against your speculation. Gold options and futures are very
highly speculative investment and mostly designed for very experienced traders.
1) Gold accounts
There are two kinds of gold accounts, namely allocated and unallocated gold
accounts. An allocated account offers the investors to keep the gold in safe
deposit box. This is considered the most secure form of investment in physical
gold. When investing in physical gold, the gold is stored or kept in a vault
owned by a recognized depository or dealer. With regard to an unallocated gold
account, investors are not allotted any specific gold bar. However,
this is advantageous for those who do not want to pay premium or insurance
charges since they do not have to keep gold in a vault.
The Power of Gold as a Commodity or Financial Security
Gold is freely convertible to any currency and accepted in any country in the
world. The recent escalations of gold prices were not unforeseen. The value of
printing paper money and stocks were falling apart in recent years pushing the
prices of gold to new record high levels. Gold has seen all time high records
of prices from time to time in last few years. As a result, millions of
investors and people have turned to gold to protect their wealth and assets in
various forms. Since gold is considered a very safe and reliable global currency,
they have purchased physical gold and invested in paper gold and physical gold
to hedge their positions or investments. Gold
was for a long time used as the standard exchange rate. Almost all countries for
many years until the early 1970s, or more specifically in 1971, used gold
standard to buy and sell gold and exchange currencies. But in 1971 the era
of flat money began which is the system in which the fluctuations of currencies
based on consumers’ confidence, economic conditions, and domestic policies making
the currencies convertible with one another. The recent demand
in gold and
financial crisis have made countries more dependent on gold to
secure their currencies.
What You Should Look for When Investing in Gold
There are many investors who are too concerned about the relatively high
prices of gold and they want to wait for lower prices. However, serious and more
educated traders are not worried about the prices but the
developments in global economic conditions, inflations, and volatile stock
market conditions. It is important to understand the value of gold. It is better
to gain the insights into various properties of gold and what gold can offer in
the long term to secure your assets and gain benefits. Smart investors look at
future possibilities when it comes to investing in gold. It is, therefore,
more important to look at various benefits you can get in investing gold than
worrying about how much gold is worth per gram.
Certainly, traders or investors will be concerned about how much gold is in
current market prices per gram or ounce but that should not be the center of
their focus and attention. Instead, educating themselves by reading various
resourceful blogs and websites can help them take timely decisions in investing
There are wide speculations that gold prices will keep going up in coming years. However, acting based on speculations will not be a good option alone. The main
things to take into consideration are the trends of the global economy, domestic
policies, inflation rates, performance of stock and real estate markets and take
calculated decisions. Most importantly, you need to understand how you are
going to benefit in the long term from gold. Gold has the power and strength to
protect your assets and help ensure your financial security. Gold is
considered the most precious metal to protect financial calamity, and it is used
as insurance against inflation and currency uncertainties.
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