If you are thinking of investing in gold, congratulations. Exactly why? It shows you think long-term. The truth is that gold has always been a ‘safe refuge’ for investors during times of financial uncertainty. As awesome as worldwide stock markets have been performing lately, the old saying of ‘what comes up must come down’ definitely is applicable not just to the physical and natural worlds but also to the finance globe. Stocks often go through boom plus bust cycles. Inflation is always hiding in the background threatening to reduce the significance of your hard-earned cash. Governments are not immune from devaluation. These are the main element risks investing in gold protects against. You would do well to diversify your own investment portfolio by investing in gold. With that said, there are so many ways to invest in gold and precious metals, for that matter, out there. How do you select the ‘best’ way to invest in gold.
The problem with defining ‘the best’
Let’s face it, ‘the best’ is a very subjective and slippery term. Probably this is why salesmen love using the term ‘the best. ‘ Hearing ‘the best’ makes you feel good but odds are you’re just letting your thoughts and assumptions regarding the meaning of this overused and abused phrase control you. The sad reality is that will what is ‘best’ for your might turn out to be a disaster for someone else. And vice-versa. Moreover, you can’t base your investment decision on what is ‘best’ for a salesman trying to get you to invest in a particular precious metal investment option. The good news is that there is a powerful way to define what is ‘the best’ when it comes to your gold investment options: focus on your needs. That’s right-by focusing on what your particular investment needs are usually, your risk profile, the amount of time and management you’re willing to placed into your gold investments, and other aspects, you can come up with the best range of options when it comes to owning gold. Keep your needs in mind when examining the different precious metal investment options listed below.
Direct ownership: Physical gold
There is a certain mental benefit to being able to physically deal with the gold you are investing in. Unlike stocks which give you a legal reveal in a corporation, when you buy direct physical gold, you get to handle the gold. You get to touch it. You can see it. There is a psychological benefit to this. You simply and directly feel you have something valuable. So far so good, correct? Well, the downside with owning precious metal directly is that you have to worry about robbers. If you think your gold bullion is useful to you, it is doubly more useful to people who want to rip it far from you. You have to invest in a home safe or pay to have your gold stored somewhere. Also, you have to have the proper insurance for your gold bullion investment. When it comes time to sell, you will need to pay assay fees so the organization (most people usually sell to some company that buys and sells gold when they liquidate) can be sure that you have been selling real pure gold bullion. Keep these details in mind. They certainly add to your cost. Also, there is a psychological price to having physical precious metal in your home-you can lose sleep due to the risk of crime.
Direct ownership: Gold coins
The great thing about owning gold coins is that you get to play two assets in one. First, you’re obviously purchasing the gold market.
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At the very least, your own gold coins will be worth the price of the gold they contain. Gold prices can change dramatically and you can definitely play the gold market by buying gold coins. The second market you’re investing in when you buy gold coins is the collectible coin market. Gold coins get their value from two sources: the amount of gold they contain and the premium collectors pay money for the coins. This is a serious thought. Why? When you buy your gold coins, you really pay the base gold value as well as a premium for the coin. This can be a severe headache when you try to unload your gold coin collection. You might turn out losing money if the price of gold continues to be stable or the same and the collector premium of your coins don’t increase.
Investing in gold trade traded funds is the safest method to invest in gold bullion. Imagine engaging in physical gold without having to worry about criminals or paying all sorts of fees for that storage and insurance of your precious metal holdings. Exchange traded funds function like mutual funds. They are exchanged based on net asset value (NAV). Gold ETFs only have one asset and one asset alone: a fixed quantity of gold bullion. You basically purchase the Gold ETF and play this like a stock investment: buy reduced and sell high. The advantage to this way of owning gold is that it is very water. You can easily buy to get in promote to get out. The biggest advantage in order to ETFs is that they make investing in precious metal very easy. The downside is that you don’t get to physically handle your gold opportunities. Another downside is that the price of the particular ETF is tied to the price of precious metal solely.
Gold mining stocks
Probably the most interesting ways to play the precious metal market is to invest in gold mining stocks. You get rid of the headaches of physical and ETF precious metal investments by investing in gold mining stocks. Your stock might go up more than the appreciation of gold prices. Why? Your stock might have a ‘market premium. ‘ This is the extra value placed by the market for hot stocks. With gold mining stocks you essentially get the advantages of playing in the gold and stock markets. The downside, just like with playing the stock market in general, is choosing the right company to invest in.