Investing in gold is a lucrative way of investing your money and a fantastic way to diversify risk. But, just like with any other kind of investment, how successful you will be is determined by how sound your investment strategy is.
The Basics of Gold Investment
You may have heard of bullion, which is a quantity of precious metal, such as gold, that usually comes in bulk. It is measured by its weight and can be cast as bars or bought and sold as coins. Typically, gold is traded as small grains.
As for coins, gold coins are cast from gold and other precious metals and bought for the purpose of investment. The value of the coins is based on their bullion content. Prices of bullion tend to fluctuate on a daily basis. If you have gold you want to sell and you want to get a great deal, take advantage of cash for gold offered by Gold Buyers Melbourne. They are one of the dealers who can provide you with favourable rates and terms.
Ways to Invest in Gold
1. Direct Ownership of Gold
Gold bullion is certainly the ultimate expression of amazing value. The value of gold tends to rise based on supply and demand and isn’t influenced by interest rates. The downfall to owning gold, though, is that it usually trades with a wide spread between asking and bid prices. If you’re wanting to invest to make money, don’t expect to turn a quick profit. Generally, you end up buying at retail and selling at a wholesale price. But, gold isn’t merely a theoretical asset, but rather an asset that is favoured for holding value. The best types of gold ownership include:
- Canadian Maple Leafs
- American Eagles
- South African Krugerrands
2. Gold Exchange-Traded Funds
With the explosion in exchange trade funds, or ETFs, there is an even more exciting way to invest in gold. ETFs are a kind of mutual funds that trade on the stock exchange, the same with other stocks. The exact portfolio of ETFs is fixed in advance and won’t change. This is a highly practical way to own gold within your investment portfolio.
3. Gold Mutual Funds
If you are a little wary of investing in physical gold but you still want to make some sort of investment, one of the best tips on how to invest in gold we can give you, is to try your hand at gold mutual funds. The funds comprise of portfolios of different gold stocks, including junior and senior gold stocks. Senior gold stocks, particularly, are well capitalized companies that have profitable track records and own established mines that are known for producing large quantities of gold.
4. Junior Gold Stocks
This is a more speculative level of stock. Junior stocks are a lot less likely to own very productive mines and are often used as a way of exploring the market. They offer higher potential profits but with that comes a greater risk of loss. Typically, capitalization is smaller than that of senior stocks. If you have a broader risk tolerance, then junior stock golds are a good way to go. You will also need to be able to accept the possibility of losses but you may reap triple-digit gains.
We hope that this article has helped you get a good understanding on the fundamentals of gold investment. If you have some points to share, share it to us in the comments.