Comparing Ways to Invest in Gold

Whether you invest in gold as insurance against a devalued currency or to increase your wealth, your choices for how to invest vary. All kinds of investors invest in gold, from the lay person to the ultra wealthy individual. The method you choose depends on what your financial goals are and whether you want immediate access to your gold.

1. Coins

Buying gold coins is a great way to invest in gold if you want to take direct possession of your gold. If you’re purchasing gold just in case the currency is worth much less in the future, then you want to stay away from rare and collectible coins. Bullion coins and U.S. and European coins minted before 1933 are popular choices. You can buy gold coins, such as the American Eagle and Krugerrands, from your local coins dealer but also from pawn shops and estate sales. Be wary of buying gold coins online that you can’t see and touch before making a purchase.

2. Futures

One route that some experts recommend that you stay away from is the futures market if you want to invest in gold. It’s possible to lose all of your money, and it’s definitely not an option if you’re looking for a safety net. There’s a lot of speculation when dealing with futures, and it’s more like gambling than investing. Futures trading is also hard to grasp for the average non-professional investor, and you should stay away from investments that you may never be able to understand without the help of your broker.  

3. Mutual and Exchange-traded Funds

When you invest in a mutual fund based on gold shares, you own shares in mine companies. Rather than have real gold in your possession, you’ll get a piece of paper indicating that you own shares. Stocks can fail to perform, no matter how diversified the mutual funds. As you may have learned only too well along with many stock investors in recent years, you cannot control external market conditions, which can have a negative impact on your stock portfolio. Even if the price of gold goes up, you could be stuck with shares that remain stagnant or decrease in value. One type of mutual fund that you can invest in is an exchange-traded fund. It’s traded on the stock exchange, but the asset is gold bullion.

4. Bullion Bars

Another way to own real gold is to own bullion. Bullion is mainly available in the form of gold bars, but you can also purchase bullion coins, as discussed earlier. Bullion bars move up and down with gold, and they are investments you can hold in your hand. Some investors prefer coins to bars because coins are viewed as easier to sell or exchange. Bullion can make a good investment and comes with a certificate listing the gold content. Its value is based on the weight of the bars.

The first decision you have to make before you invest in gold is whether you want to take possession of your gold or not. You could do a combination of the two, but you should be aware that you risk losing your investment if you invest in “paper” gold.