Gold has been held by many investors for centuries as a way to diversify their portfolios or protect wealth. The precious metal’s price stability can offer a hedge against inflation and geopolitical uncertainty, but it hasn’t been without its own volatility.
Deciding whether or not to invest in gold as a part of your overall investing strategy depends on your goals and risk tolerance. But understanding the various ways to buy gold can help you choose the option that’s right for your needs.
Many investors choose to purchase physical gold because of its transparent pricing and global demand. However, that route can be costly due to recurring fees for storage and insurance. Additionally, the gold market can be highly volatile over shorter time frames, so you may find yourself selling at a loss.
If you’re looking for a more liquid alternative, you can invest in gold via mutual funds or exchange-traded funds (ETFs). These funds track the price of gold, making them easy to buy and sell at a much lower cost than purchasing physical gold. Investing in a gold ETF can also provide more diversification than buying physical gold, as these funds are often comprised of a basket of different mining companies.
For those interested in speculating on the future direction of gold prices, futures contracts are available. These standardized trading agreements allow you to buy or sell a set amount of gold on a future date at a specified price. These contracts can be purchased and sold through a commodities broker, but they are typically geared towards more sophisticated investors.
Investors who choose to buy physical gold typically purchase bars or coins. This allows you to get a better feel for your investment and can be an ideal option for those who want to see their purchases physically. However, the large size of some bars can make them difficult to transport and illiquid. In addition, some bars require special equipment to saw off and sell.
Find out more on how gold can be purchased through a number of bullion dealers. While these can offer a similar experience to other buyers, they usually charge higher dealer fees than the spot price of gold. Furthermore, many bullion dealers will not accept certain types of coins, so you’ll need to be sure that your specific investments are acceptable.
Finally, you can purchase shares in gold mining companies through a stock brokerage. While this route can be more complicated, the major gold miners have expansive global operations and business factors that play into their success. This can allow them to continue generating profits even in the event of flat or declining gold prices. However, it’s important to note that these companies often face a high degree of volatility as their share prices fluctuate. Regardless of the method you choose, be sure to do your research before investing in any type of gold.