- 28 Apr 2022
- Greg Morrison
- Precious Metals
- Comments: 0
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Are you ready to join the world of investing? An outstanding aspect you should be aware of is an array of options to choose from in the industry. However, you need to bear in mind that newer stocks in the market can be volatile.
On the other hand, gold is an investment that you are guaranteed as it has a physical value. This implies that with a better understanding of gold investing, you are sure to reap a high rate of return. Here are gold investment opportunities you can try out.
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Otherwise, continue with our basic beginner's guide for the best options and opportunities below!
Gold Investment Opportunities
Gold Bullion
Doubtlessly, bullion is what many people think of when they hear about gold investing. One way to be emotionally satisfied that you owe gold is by purchasing it in bullion- shiny gold bars. You’ll be satisfied by looking at and touching them.
Gold bullion comes in bars ranging from a few grams to 400 ounces. Take note of the fact that investing in gold bullion at the moment can be an expensive bargain. This is attributed to the fact that the price of gold per ounce now stands at $1900.
Due to the high bullion price, it would be best to consider purchasing it from a reputable gold dealer. You can also choose to buy it from a gold seller connected to the government mint. It is worth noting that you can choose to purchase the gold bullion online or locally.
Note that if you purchase from a respected dealer, you’ll not have to worry about appraising the gold. To ensure that you protect your long-term investment, ensure to inquire with the seller about the buyback policy. This is a policy that guarantees that you’ll not have to incur a second premium if you decide to sell the gold back to them.
If you decide to grab this gold investment option, make sure to be on the lookout for the prices of gold. With this information, you’ll know the best time to make the purchase.
Gold Jewelry
Another way of investing in gold is through gold jewelry. Among the questions that might be lingering in your mind include; “can gold jewelry be more than a fashion statement?” or “is it a reliable investment strategy to go for?”
It would be best if you had in mind that you need to have a substantial gold accessory to make more money. One thing you can be sure of is that amassing gold jewelry can be helpful when you are in dire need of money in the future.
Besides being the best way to impede market volatility, you can use gold jewelry if you don’t have cash, as it is an untraceable asset. One of the reasons investing in jewelry is a great idea is the presence of the global market. What’s more, there is a high demand for gold jewelry.
The next step will be purchasing gold jewelry. First, you need to be wary that scammers are in the market, making it necessary to buy from a reliable source. When purchasing jewelry, you need to have a better understanding of the purity of gold.
You might be familiar with the term ’24-karat’. Karats is the form in which gold’s purity is calculated, and 24k means that the jewelry is 100% gold. When the number of karats in a piece is low, it means that it’s less pure of good, and it’s wise to avoid buying them.
Gold Coins
Its worth noting that common gold coins weigh between one to two ounces. One of the significant reasons investing in gold coins is an excellent idea is that it has lower risks, yet you can be assured of security. Since gold has had a physical value for centuries, you can be guaranteed good future returns.
With gold coins, you can be sure to save money if it’s impossible to do so using currency. In addition, this is a reasonable gold investment option as it can be preserved through many generations. One of the best parts of owning gold coins is that you do not have to worry about maintaining them like other tangible assets.
Therefore, you can store the coins for many years and sell them when you’re in an emergency with such low maintenance. To ensure that you reap from your investment, it is wise to confirm the purity of gold in the coins before purchasing them.
If you decide to purchase gold coins, the proper procedure will be to get them from a financial institution or from a reputable dealer. If you choose to buy from anybody else, the right thing to do will be to have it verified to ensure that the coins are pure gold. To ensure there are no fingerprints or damages to the coins, always store them in their cases.
Gold IRA
A gold IRA is a particular account that allows you to invest in gold coins and bullion. It would be best to know that if you want to hold physical gold in an IRA, this cannot be done in a regular account, thus making it necessary to own a gold IRA.
It would be best to know that the government has stimulated regulations revolving around the type of gold to be held in an account for gold IRAs. In addition, it has outlined where it should be stored. It would help if you were acquitted with the different types of gold IRAs:
Among the reasons you should consider investing in gold, IRA is the tax merits. Besides getting special treatments like other standard IRAs, withdrawals from Roth accounts are tax-free.
In addition, you have control over your account. What you should understand is that gold IRAs are self-directed. This means that you can manage your contribution and make the relevant investment decisions.
If you choose to invest in a gold IRA, you need to understand that it is similar to other asset classes. That being said, you have to ensure that your investment portfolio is in line with your time horizon and your level of risk tolerance. Note that even when adding gold into your retirement plan is ideal for curbing economic uncertainty, it would help ensure that it amounts to a small portion of your retirement nest egg.
Gold Futures and Options
Trading gold futures or options contracts is, without a doubt, one of the riskiest forms of investment. It would help to know that the value of the future and options primarily rely on the cost of an underlying asset.
To make the right decision, you ought to understand the difference between future and option contracts. A futures contract is a binding agreement to sell or buy a security at a certain amount without factoring in the existing marketing conditions. On the other hand, an options contract allows you to sell or buy a security when it gets to a certain price on or before a specific date.
Notably, to invest in futures or options, you’ll need to open an account with an online broker that offers these vehicles. You also need to understand that you might be required to sign additional forms. This is to prove that you are aware of the risks that come with investing in derivatives.
If you decide to settle for this form of gold investment opportunity, you need to monitor your holdings actively. This is necessary to ensure that you can sell, roll over, or exercise other options before the contracts expire. If you are looking to have more financial integrity, flexibility, and leverage than you can get from trading other physical commodities, go for future contracts.
Invest in Gold ETFs and Gold Mutual Funds
Investing in gold ETF is an ideal move if you don’t want to go through the trouble of owning physical gold or monitoring the margin requirements of the futures market. This is great as the ETFs track the commodity for you.
You can consider investing in ETFs, including iShares Gold Trust and SPDR Gold Shares. One benefit you’ll get from having a good ETF is that you can easily exchange for cash at the market price. Furthermore, you can trade the fund on any day that the price is favorable.
One of the significant reasons why investing in gold ETF is a wise move is because minimum commitment is required from you. An outstanding aspect is that you can purchase gold with a small sum, and the broad exposure will minimize your risk.
Additionally, Gold Mutual Funds are managed by investors; therefore, a guarantee that you will reap great returns. The purpose of these funds is to beat the returns of index funds that are not managed. For this, you’ll be required to pay a higher expense ratio.
Invest in Gold by Purchasing Gold in Gold Miners
If you are looking for a more straightforward proposition than buying physical gold, investing in companies that mine, refine and trade gold is an excellent choice. To purchase stock from the gold mining companies, you’ll need to have your brokerage account.
Some of the major stocks in this sector include:
One thing you need to bear in mind is that the shares of stock of gold companies are correlated with gold prices. Additionally, the company’s expenses and profitability also affect the shares. This, therefore, means that investing in gold companies carries the same risks as investing in other stocks.
Streaming and Royalty Companies
Another ideal way to invest in gold is via streaming and royalty corporations. The purpose of these companies is to provide cash upfront to mining companies for the right to purchase gold in the future. Before you invest in a company, ensure to learn about the associated risks to be on the safe side.
One of the available streaming and royalty companies is the Franco-Nevada Corporation. One thing you should note about Franco-Nevada is that it does own any gold mines. However, the company purchases the rights of royalties from other gold miners.
Gold Certificate
Another reliable way to invest in gold is buying gold certificates. These are notes that are issued out by companies that own gold. Alternatively, you can choose to purchase a gold certificate from a bank that has gold.
If you choose to buy the notes for a bank, it is best you be aware that the company will owe you the gold even though you don’t technically own it. You’ll be given the ‘unallocated’ gold since the gold certificates represent the gold value and not a specific bullion.
A positive aspect of ‘unallocated’ gold is that you are not required to pay a high premium. However, the part you should understand is that if the bank liquidates or goes under, there is a high probability that you might lose your entire investment.
Another alternative will be for you to purchase gold certificates for allocated gold. This means that the gold in the bank belongs to you. Since you own the physical gold, the bank is mandated to give you the serial number of all gold bars.
You have nothing to worry about with allocated gold as they cannot be liquidated or seized. If the bank goes under, all you will be required to do is show proof of ownership using your gold certificate. It would help for you to know that since the bank is storing the gold for you, you might be required to pay higher fees.
Are Gold Investments a Great Idea?
Now you are aware of the different gold investment opportunities available for you to consider. This then begs the question, is investing in gold a wise move? To begin with, gold investments are ideal as they come in handy in case of a global event.
What is more, you’ll have a higher probability of curbing any unforeseen economic instabilities by purchasing gold. You also need to understand that the value of gold grows over time, making it an excellent long-term investment. It’s, therefore, without a doubt that investing in gold is a solid plan that will place you in a good financial position in the long run.
The bottom line is that every form of investment has risks, and gold is not an exception. This being said, it would be best that you analyze the different propositions to help you determine which opportunity would be worth it for you. Things you should consider is the rate of returns you will get from a specific gold investment option.
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