For the past few years, gold has been one hot commodity. Prices have hit record highs and all of this attention means that more and more investors are looking for ways to incorporate precious metals (especially gold) into their overall investment portfolios and strategies. If you are one of those investors looking to break into the gold market, here are some of the basic facts you need to know.
Different Ways to Invest in Gold
There are a multitude of different ways that you can add gold to your portfolio, so you won’t be restricted to just the gold buyers NZ has to offer. Gold investment opportunities include:
* Gold bullion
* Gold coins
* Gold Exchange-Traded Funds (ETFs)
* Gold Mutual Funds
* Gold futures
* Gold options
* Gold mining companies and
* Gold jewelry
Many individuals first get “gold fever” when they take the time out to go through their old or broken gold jewelry and are interesting in selling gold to make a profit. With stores, kiosks and even mail-in campaigns to “recycle” unwanted gold jewelry, this is often the first step into this particularly hot commodity.
After making money with these solid pieces, many investors want to add more gold to their portfolio. Although most novice gold investors envision large Fort Knox quality gold bars, buying gold bullion can actually be a pain in the neck. With a bar costing upwards of $100,000USD, this requires a considerable investment and liquidating a portion of that bar is virtually impossible to do. For this reason, many start out with gold coins through one of the various local or global gold coin traders and providers.
While coins are easier to manage than bullion bars are, they still offer complications when it comes to storage and insurance and security. Many investors who have gained a certain level of comfort in the gold market often make the move away from physical gold and make the move to valuable yet less tangible investments into gold.
ETFs, Mutual Funds, Futures & Options: Other Ways to Buy Gold
For investors who want the strength of gold to back up their security net, but don’t want the headache of storing and cataloging their treasures, the best option is to find other ways to own gold without having to physically take possession of it. This often includes gold exchange-traded funds or bullion-backed mutual funds. Shares of these funds can amount to a fraction of an ounce of gold, so the cost to get into the gold market can be considerably lower and investors have the option to build a long-term investing strategy into precious metals. And while futures and options are an option, they are not recommended for those who are just getting their feet wet in the gold market. There is a great deal of volatility and fine print, so it is safer to wait for this investment strategy until you are more comfortable in this territory.
If you are interested in a more indirect way of investing in gold, you can always invest your money into the gold mining companies and organizations that actually perform the mining and speculation. While your shares will be purchased with cash and will be “cashed out” for cash, the gold the company secures will be paying you off in dividends.