Gold has always been a profitable investment vehicle. Unlike fiat currencies that often suffer decline during periods of economic uncertainty, gold holds its value. It provides a hedge against inflation, becoming a reliable store of value.
The best way? There are numerous ways to invest in this precious metal. Here’s a closer look at four of them:
- Physical Gold Trading
Investing in physical gold products has been around for centuries, and its importance hasn’t diminished. You can buy gold in the form of bars, coins, and other jewellery items. This will give you direct exposure to the metal.
Bullion bars are available in various sizes, from a quarter-ounce wafer to a 400-ounce brick. However, new investors generally prefer coins, since they are easy to buy and sell. Irrespective of the physical asset, buy it from a reputable dealer.
Investing in gold jewellery items comes with the added experience of wearing them. They are often passed down to the next generations as family heirlooms.
The only drawback? Safekeeping physical gold is a challenge. You need to get either a home safe or a bank deposit box. You also need to think about insurance.
- Gold Exchange-Traded Funds (ETFs)
Want to pursue gold trading without the hassle of physical ownership? Gold Exchange-Traded Funds (ETFs) are the right move!
Look at it this way: Owning physical assets means dealing with transaction fees, insurance, and the cost of storing. In comparison, gold ETFs give you access to a more liquid and low-cost market.
A gold ETF gives you access to gold bullion, allowing you to speculate on its price movements. The best part? Gold ETFs are traded on the stock exchange market, which means they can easily be integrated into your existing trading portfolio.
- Gold Derivatives: Futures and Options
Are you an experienced trader, but don’t want to risk a lot of capital for the time being? Gold derivatives have got you covered.
Here’s the easiest definition: Gold derivatives, such as gold options, gold futures, and gold warrants, are not title deeds, nor do they give you access to the physical asset. Instead, these are contracts that represent the right to buy or sell an asset (in this case, gold).
Options and futures can be used whether you think the price will go up or down. Gold options can be traded using standard brokerage accounts.
- Gold Mining Stocks
Unlike fiat currencies, gold can’t be printed or produced out of thin air. It is mined by international mining companies. The good news? You can buy a stock in these gold mining companies and add this precious metal to your trading portfolio.
When gold prices rise, mining stocks deliver high returns on investment (even higher than physical gold).
That said, keep in mind that stocks carry some additional risks, such as:
- Operational costs
- Mining operations complexities
- Environmental regulations
These factors impact your profit levels. Always research a mining company’s financial health and track record of delivering shareholder value.
