Are you looking to start your gold investment journey? Well, there are multiple options and companies to consider. Unfortunately, newer stocks may be super volatile and even harder to predict.
For many decades now, gold has been and will continue to be the world’s greatest currency choice. It has since become well-known to facilitate wealth creation. That’s because its price tends to increase over time.
Today, many investors opt to buy gold as a way to evade inflation and political unrest risks. Moreover, it offers an excellent way to reap maximum returns, especially when dealing with long-term investments.
However, before you make such a move, you'll need to create a proper gold investment plan. That's a necessary skill you need to know these days to help you balance your general portfolio. In this ultimate guide, we will help you understand how to create a solid plan for your gold investments.
Step 1: Get A Free Gold Investing Kit & See If You Are Someone Who Should Invest
What Is Investing in Gold All About?
Just like most assets you can choose to invest in, gold exists as a physical commodity. As a result, it is among the world's oldest and best investment commodities. That is why most people tend to risk investing in gold than any other assets readily.
If you wish to invest in gold, there are several ways to do so. Such options include gold bars, jewelry, mutual funds, mining companies, and virtual gold investments. However, before jumping into gold investments, it is critical to understand their differences, potential risks, and gains.
Gold's value may change quickly and more frequently. Such shifts qualify gold-related investments as an unsuitable option for investors who are anxious about daily performance. Therefore, it is wise to invest in gold if you're ready for a challenging ride with risks but guarantees a great possible payoff in the long run.
Why Gold Investment?
While gold may seem a flexible investment, you should not get discouraged. Gold has proved to increase in value over many years. Even as other types of investments fall, gold sees incredible gains. In other words, your gold investment may thrive through difficult periods when your stocks are below par.
Gold investments allow you to select how best you want to be and modify your risk levels as needed. For example, if you're into physical assets, you may opt for gold bullion or jewelry. And if you wish to diversify your portfolio, go for gold funds or obtain shares from mining companies.
Moreover, gold investment is worthwhile as it is an excellent shield against inflation. Over time, the benefits of gold investment have stayed on course with inflation rates. It also boasts an inverse relation with equity-based investments. This means that even if equity markets begin declining, gold will still perform well.
Ways of Making Gold Investments
The main question here is, how can you invest in gold? Primarily, gold boasts a vast range of investments that range from physical gold to bonds and mutual funds. Traditionally, investing in gold involved different forms of bullions, coins, jewelry, or artifacts. Nowadays, you can find newer options of gold investments that include gold mutual funds and gold exchange-traded funds (ETFs). So, let's learn the different ways through which you can invest in gold.
Purchasing physical gold is undoubtedly the oldest way of gold investment. Gold bars and coins can be bought either as gold jewelry or as gold bars.
It is among the traditional methods of investing in gold. It has been in the business for ages now. While you may buy jewelry for consumption purposes (wearing), it may be an excellent investment product. However, investing in this form of gold comes with many risks that pure gold doesn't have.
For instance, you'll need to be careful when buying gold jewelry. That's because you may find that not all the secondhand pieces of jewelry offered by reputable dealers are worth investing in.
You need to know its authenticity not just when buying it but also whenever you resell the piece. Therefore, always buy a piece of investment jewelry from highly reputable dealers and the necessary documentation.
Besides, you may need to pay some markup depending on the company that designed and manufactured the jewelry piece. This may be about 20% or even three times more than the gold’s raw value. Check also the purity of the jewelry or its gold percentage composition.
Gold Bars and Coins
Gold bars and coins offer a more lucrative and excellent investment than jewelry if you purchase physical gold. That's because they contain pure gold and don't require any charges. First, though, you'll need to determine from which dealer to purchase the gold’s and coins.
Such bars and coins are often offered for sale by jewelers or banks. Therefore, it's much easier to buy as the banks are always available to enable you to buy the gold, but they don't purchase it back. Even with the jewelers, you can buy and sell back the bars and coins to the jeweler.
Gold exchange-traded funds are quite similar to purchasing an equal amount of physical gold. They're similar to stocks as they get transacted on the bourses. All you need to have is a trading account and a DEMAT account.
Gold ETFs comprise 99.5% pure gold in composition. Besides that, 90% of investments are made on physical gold in most cases, while the rest serves as debt instruments. Interestingly, Gold ETFs often get listed on NSE and BSE, meaning that you can easily transact them even in smaller quantities than the physical ownership of physical gold jewelry, bars, and coins.
When you invest in gold funds, you’ll be investing in stocks of companies that operate in gold and gold-based activities. They include platinum, silver, and many other metals in their investment basket.
Unlike gold ETFs, gold funds require a mutual fund manager to manage them. They also ensure fundamental trading analysis to purchase and sell stocks to increase returns for investors.
The returns on gold funds vary in relation to the market status to a certain extent. They also get rid of the risk associated with returns largely by distributing investments over vast arrays of investment.
In short, mutual funds operates on the principle of diversification. As an investor, weigh out the possible risks and goals before going for mutual fund investment.
Buying Gold Mining Stocks
You can also invest in the stock of companies that deals with mining, refining, and trading gold. It can be a great investment option than buying physical gold. In this case, you’ll be buying stocks owned by gold mining companies. All you need is to use your brokerage account.
Shares from stock gold companies are correlated with gold prices. However, they are also based on the basics related to every company's existing expenses and profitability level.
Investing in gold mining companies bears similar risks, just like investing in other kinds of stock. However, individual stocks tend to be more flexible and don't offer you the needed security of varied funds.
Gold Features and Options
Trading gold futures or options contracts is one of the riskiest ways to invest in gold. The two exist as a type of speculative investment. They are derivatives, meaning that their value depends mainly on an underlying asset's price.
Features are agreements made to purchase or sell a particular amount of gold on a specific date in the future. Their transactions occur in contracts and not shares. They represent a specific predetermined quantity of gold.
To invest in gold options or futures, you need to have an account with an online broker that offers such products. Many online brokerages allow for trading in such securities. However, they need account holders to trade and sign additional documents acknowledging the potential risks of investing in features and options.
After having a well-established brokerage account for trading futures or options, you can then use the platform to buy or sell them directly. Many platforms charge a certain amount of commission for all features and options. This often varies depending on the number of contracts you purchase or sell.
Since the amount may be quite large, features tend to be more suitable for an experienced investor. Most people prefer to invest in gold features due to their incredibly low commissions. Plus, the margin requirements are also very low than the traditional equity investments.
You'll find that some of the contracts being settled in dollars while others in the form of gold. In order to avoid any inconveniences, you should pay close attention to contract specifications.
Gold options on features are perfect alternatives to purchasing features contract outright. They provide the owner with the right to buy the features contract in a specific timeframe and price.
The good thing with an option is that it leverages your initial investment and reduces losses to the specific price paid. However, you'll need to pay a premium to the hidden value of gold to gain ownership of a gold option.
Due to the volatile nature of features and options, this investment way is quite unstable for most investors. Regardless of the case, futures exist as the most affordable way to purchase or sell gold. That is especially if you're investing larger amounts.
Gold Investment & IRA Rollover Companies
That said, we believe that you now know the vital concepts about investing in gold. It is also critical to understand some of the most reputable companies that can allow you to invest in gold.
Typically, there are lots of gold investment companies to consider. Below are our best three options:
Goldco is regarded as one of the most reliable and reputable Gold IRA rollover companies. They are a private-based company dedicated to helping every investor to accumulate wealth and safeguard their assets.
The company boasts a Triple-A rating from the Business Consumer Alliance. Besides, the Better Business Bureau gives it an A+ rating for its authentic and ethical business practices.
You can invest your precious metals through Goldco and enjoy the incredible tax relief benefits of your retirement benefit plan. Whether you intend to invest in silver, gold, or other kinds of precious metals in this company can help protect you from a volatile stock market. By doing so, you'll get some peace of mind.
Goldco provides a wonderful selection of silver and gold coins and bars that meet the required standards set by the IRS. These standards include 99.5% gold purity and 99.9% pure silver.
This is another great option you can go for when you want to invest in gold. Since its launch in 2012, Augusta Precious Metals has gained a good reputation in the world of gold investment.
They boast an A+ rating and a Triple-A rating from the Better Business Bureau and Business Consumer Alliance, respectively. In addition, the company has great reviews from their satisfied clients on Facebook, Google, and other dating websites. This means that you can be sure to reap maximum benefits on your investments.
The company can help you to rollover your current retirement account into a Precious Metals account to enable you to enjoy all the returns on gold investment, including tax benefits linked to the IRA.
If you want to buy silver or gold as a form of personal investment, this company has your back. By doing so, you can easily maintain better control of gold investment and even select how and where to store your bars and coins.
This company comes with a vast range of common gold bullion, silver, bullion, premium gold, and silver. You'll also get excited with the many coins, bullion, and bar pieces the company offers.
#3. Birch Gold Group
The Birch Gold Group is among the highly trusted and reputable precious metal companies in the U.S. It officially began its operation in 2003, and the headquarters set in Burbank, California.
This gold investment company ensures every client understands what it takes to invest in silver, gold, and other precious metals. This aims at enabling the clients to make informed decisions for a successful financial state in the future.
With well-experienced professionals, you can always feel safe and comfortable choosing this company. Like the above gold investment companies, the Birch Gold Group boasts incredible certifications.