Gold Investing Basics

Because the economy is still in a very bad shape, there are only a few investments that you can really call “safe”, but there is one form of investment that has always been very rewarding, and that is gold. Gold, in all its different forms has always been a very viable investment, mostly because it is well protected against inflation, and its value somehow always rises as time goes by. Another reason why gold is so appealing is that its value does not rely on any country’s inflation rate; its value is constant and universal all around the world.

If you are a beginner at investing in this precious metal, then here are some gold investing basics that you may find useful.

Before you even start investing in gold, you need to know more about its different forms. If you think that it does not matter what form of gold you invest in, then you will be losing money instead of making more. Each form of gold investments have its own share of pros and cons, knowing about them will help you decide on which type of gold investments is the right one for you. And to help you get started, here are some of the most popular forms of gold that make for great investments.

Gold Coins – These are the most popular means of investing in gold, mainly because they are quite easy to get a hold of than the other forms. There are basically two types of gold coins, and both of them have their own way of valuation. The first type of gold coin are the bullion. These are usually made entirely out of gold and they have little to no collector’s value, you are basically paying strictly for the amount of gold that the coin contains. The other type of gold coins are the Numismatic kinds. These are the coins that have great collective value, mostly because of their rarity and history; there are often times when the collector’s value of the coin is significantly higher than its actual gold weight. If you are not really a coin collector and would only like to invest in the actual gold amount, then you should only get gold bullion coins.

Gold Bars – This is probably the most convenient method of investing in gold, mainly because they cost less than gold coins. Gold bars vary in size from bars that are as large as 400 troy ounces to small nuggets that contain 10 grams of gold. But even though gold bars costs less than gold coins, there are some risks involved in buying them, one is that there are a lot of forgeries out there. So you need to be careful and buy your gold bars from respected dealers only.

Gold Exchange Traded Products (ETP) – Gold ETPs are like certificates of ownership of a particular amount of gold. ETPs are favored by some people because they do not have to go through all the trouble of storing actual gold, and the value of their certificates also rise according to the value of gold in the market. But there are drawbacks to owning gold ETPs, one is that you have to pay an annual storage fee for the amount of gold that represented by your certificate. You pay for the storage fee by selling some of the gold that is stored under your name; so basically, as time passes by, the amount of gold represented by your ETP certificate decreases as well.

Mining Stocks – Besides investing on actual gold, you can also invest in gold mining companies. These kinds of stocks move differently from regular stocks, and they are usually unpredictable. Most of the time, gold mining stocks move up and down in relation with the market price of gold, which is why it is very attractive for some people. But there are a lot of other factors that can negatively affect their price, like mismanagement of the company (which often happens in gold mining), extreme weather conditions, and the occasional natural disaster, all of which tend to halt operations, and when a company’s mining operations gets halted then the value of their stocks will also take a tumble.

Gold IRA & Gold 401k – This is probably one of the safest ways to start investing in gold without the hassle of having to physical take hold and store the gold yourself. Part of your IRA or 401k can be invested into physical gold and held by a gold custodian. It enables your investment portfolio to have the financial risk protection offered by the attributes of gold.

These are just some of the many ways that you can own your own gold, and all of them are readily available to you.

Knowing about the different types of gold investments is important for a newbie investor. Having a good grounding in gold investing basics will help you to make a more informed decision. Each type has its share of advantages and disadvantages, which is why you need to find out which of them works best for you. So, if you are looking for a stable, and very lucrative form of investments, then you should consider investing in one of the most precious metals on earth, gold.


Donna Morgan

Donna Morgan


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