What Are Your Options When It Comes to Gold Investing

You’ll have 4 different options to choose from when starting out with gold investing. While there are others, these are the most popular and common choices for most people.

By Szaaman (Own work) [Public domain], via Wikimedia Commons

1. Purchasing the real thing

Buying gold can include purchasing real gold coins or bouillon as a physical asset. While this type of purchase sounds intriguing, it does have certain drawbacks to it. When you are buying small quantities of gold, you’ll have to find a way to insure and store them properly. As well, there are hidden costs including transaction fees that can make this type of gold purchase out of reach for some people.

If you do decide to buy the real thing, you’ll quickly get addicted to accumulating vast amounts of it and it can be quite a lucrative game to play.

2. Mining stocks

This type of gold investment involves buying company stocks instead of gold coins or bullion. It is a way of taking advantage of gold prices on the rise through company operations. In most cases it costs less to extract the gold from the ground compared to the current going price is on the trading table. Like purchasing the real thing, this is not without its drawbacks. There is a certain risk involved and if the company runs into any type of problems the stock values will go down as a result.

3. Dealing with futures and options

When you trade gold in this way, you are using credit as a form of leverage for the gold investment. This will take a certain amount of skill since you’ll want the gold to either be rising or going down according to the purpose of your trade. Many investors have become quite proficient at speculating how the prices on gold will move. This type of gold investing should be done only after you have first studied and examined the field and can have a better understanding of what you are getting into.

4. Trading with paper gold

This involves working with exchange-traded funds like mutual funds. Money is pulled together from different investors and an investment firm manages it for you. These are not managed portfolios but rather exchange-traded funds that you can trade just like you would do with a stock. Paper gold are a convenient and efficient way of amassing gold but they also come with fees that can be significant such as brokerage and management charges.

There are other means of investing in gold but most people start with collecting a few gold coins and then decide if they want to continue with their collection. Some people got hooked right away and end up with an incredible gold portfolio that includes not only the 4 investment strategies listed above but other types of gold investment opportunities as well. If you’re ready to get started, you may just want to find some coins or a small amount of gold bullion to get the wheels rolling towards a lucrative gold investment.

By Sharon Freeman