How to Invest in Gold

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Gold has always been a time-honored way to invest. Gold is the ultimate hedge against cash assets. In case the economy spirals downward again, as it did in 2008, gold will protect your wealth. Precious metals like gold are valued in an inversely proportional manner to currencies like the dollar. When the value of the dollar plunges, the value of gold goes up. Therefore, gold is an important asset for any investment portfolio that aims to diversify risk.

Despite popular belief, gold investments are not just for the ultra-rich. Even regular folks can invest in gold, and really should. Here are several rather pain-free ways on how to invest in gold:

How to Invest in Gold

how to invest in gold

Buy Physical Gold

The easiest way to invest in gold is to buy physical gold in the form of coins, bullion or bars. You can also get gold from jewelry. However, the gold must be weighed and valued for it to be of any investment worth. If you are buying gold coins, you should buy national mints, not collectible coins. Gold collectible coins are only worthy because they can be melted down. For investments, you will need minted coins approved by the IRA. You can add these coins to your IRA as well.

Gold bullion or bar ownership is the most popular way of owning physical gold. Valcambi combibars are particularly popular among gold owners because these can be broken down into smaller pieces suitable for trading. You should find a reputable trader to buy physical gold. Dealers like Coininvest, Lear Capital, BullionVault and The Real Asset Company offer gold assets as well as storage options.

Gold ETFs

Gold ETFs are the next best way to invest in gold after direct ownership. ETFs are a type of mutual fund. These do trades on stocks just like regular stock exchange portfolios. The different is that the portfolio is fixed in advance so it doesn’t change throughout the exchanging process. Gold ETFs trade only in one, single asset: gold. You can search for Gold ETFs in the U.S. by looking for the telling “GLD” symbol.  Gold ETFs are an easy and practical way to hedge your cash assets with the precious metal.

Gold Mutual Funds

These mutual funds have portfolios full of gold stock. This is not the best way to own gold, but it’s a good alternative way to get your hands on the precious metals without directly owning any. The gold stock in portfolios belongs to mining companies. So, there will be a risk involved, unlike with owning actual physical gold. When investing in a gold mutual fund, choose a portfolio with senior gold stock. That is stock belonging to large, experienced gold mining companies with considerable capital, like Newmont Mining. Senior gold stock comes from companies that are less likely to go bankrupt anytime soon.

Gold ETNs

Gold Exchange Traded Notes are riskier, but are suitable for savvy investors. Gold ETNs are based on the market for gold futures. The investor pays the bank a sum based on a certain time range, and once the amount matures, the bank will pay a return based on the gold futures market. Popular gold ETNs include Bloomberg’s CMCI Gold ETN (UBG), DB’s Gold Double Long ETN (DGP), andthe UBS Gold Double Short ETN (DZZ).

Direct ownership is the best way to invest in gold without any of the market risk associated with it. You can also consider the ETFs, ETNs, and mutual funds if you are interested in further investing in gold.

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