When financial markets experience decline, many savvy investors see precious metals, like gold, as a safe haven. People definitely have to take a look at gold and silver when thinking about moving some of their money into alternative types of investments. These are counter-cyclical assets that act as a hedge against inflation. Now, the question is, “How does someone start investing in gold?” In this article, you’re going to learn your options when it comes to investing in gold since there are actually various ways to go about it.
1. Purchase Gold Jewelry
Investing in gold jewellery is one of the most popular ways to hold the yellow commodity. Karat is the measurement of pure gold within a piece of jewelry. Karat values range from 10K to 24K. 10K jewelry is technically 41.7% gold since it contains 14 parts of other metals and ten parts of gold. 24K jewelry is what contains pure gold.
Karat affects the durability and price of each piece, so it’s important to understand what the karat value of jewelry is before purchasing it. It’s also essential to note that the higher the gram weight of a piece of jewelry, the more expensive it is. That’s because gold jewelry’s price is also dependent on its weight.
2. Buy Gold Bars And Coins
Another way of investing in physical gold is to buy gold bars and coins. They can be a good alternative to jewelry. You can get gold bars and coins from different sources. Jewelers and banks are commonly the ones who sell them. However, they’re also now available in online sources, like Gainesville Coins. Banks only sell gold, while jewelers and online sources can sell and buy the precious metal back. That being said, if you have physical gold that you want to be sold, then jewelers and online sources are the best places to go.
3. Invest In Gold ETFs (Exchange-Traded Funds)
If you don’t want physical gold, own paper gold, like gold ETFs, instead. They’re a more cost-effective manner of investing in the precious metal than buying physical ones. With gold being the underlying asset, the buying and selling of paper gold happen on the New York Stock Exchange and other stock exchanges. Because gold ETFs are low-cost, they got an extra edge over coins, bars, and jewelry that all have high initial buying and selling charges.
The price at which gold ETFs are bought is very close to gold’s actual price. Yes, the physical gold price is the benchmark, and such pricing transparency is another advantage that comes with investing in gold exchange-traded funds.
4. Purchase Gold Mining Stocks
Buying gold mining stocks is another way to invest in paper gold. Many investors actually prefer investing in this way. That’s because when compared to bullion, gold mining stocks provide more leverage. Their value may increase by at least 50% if bullion’s price increases by 25%. That’s due to the greater demand for bullion, which results in increased profit potential.
However, newbie investors must keep in mind that gold stocks are extremely speculative. If you’re just beginning your gold investing journey, gold mining stocks may not be a suitable replacement for physical gold in your portfolio. They’re not even recommended for the average, experienced investors.
5. Buy Gold Futures And Options
Gold futures and options are yet another paper gold investing choice. However, note that many investors end up losing big with gold futures and options because of these instruments’ short-term nature. That means even if you’re right about the gold price’s long-term direction, the price can still go against you in the short run. Seasoned investors who understand and know how to use high-level strategies to hedge their risk or are willing to take on a significant risk should be the only ones taking on such investments.
6. Invest In Digital Gold
Various digital platforms run by different fintech companies now offer digital gold to interested investors. At present, it’s one of the most sought-after and cost-effective ways to do gold investing. Platforms for investing in digital gold generally have an association with gold manufacturers and traders. That’s why digital gold investors can make transactions at live market prices. You can even redeem your investment whenever you want to. When redeeming, you can choose to get either physical delivery of gold or your investment’s value. Note that physical gold is used to back digital gold investments.
Depending on its form, the nature and cost of gold investing vary. That’s why running a thorough check on your investing purpose and goal is crucial. Keep in mind that a specific way of investing in gold that works for your friends and peers may not suit your objectives. It’s important to always consider your budget and your need.