Gold has remained a popular investment for thousands of years. Many see the asset as a haven from financial and political instability.
Today’s investors find themselves in the middle of inflation. Historically, gold has acted as an inflation hedge. Its limited supply makes it attractive in a world of money printing.
More investors ask themselves, “Should I invest in gold?” You might have the same thought about investing in gold.
You can invest in gold through various methods. We’ll share the best ways to invest in gold.
Physical Gold
Some investors do not want other people managing their assets. Physical gold appeals to this crowd.
Physical gold gives you ownership over your asset. You don’t rely on a third-party individual or the stock market to maintain gold’s value.
While physical gold is the most pure-play, it comes with risks. You must store gold in a safe location.
Many people opt to store their gold in a bank’s safe deposit box. Putting your precious metals in a waterproof container adds extra protection.
Investing in gold gives you a reliable asset. Physical gold is the safest way to get started in gold.
Gold ETFs
Not every investor wants to hold onto physical gold. Gold ETFs present a viable alternative.
These funds track the price of gold. If gold rises 1%, these funds should also increase by 1%.
You do not have to worry about storing gold. Someone else handles gold storage for you. Gold ETFs appeal to investors who want a passive approach to gold investing.
Gold ETFs have expense ratios that bite into your profits. While these expenses don’t add up to much, physical gold does not have this expense.
ETFs give you exposure to gold and various mining companies. This dynamic can lead to deviations.
Successful mining companies will drive up ETFs. Flailing mining companies can drag down the ETF.
You should review a fund’s stock positions before investing.
Individual Gold Mining Companies
You can also buy stocks for individual gold mining companies. Some companies perform better than others. You can focus on an ETF’s top performers and ignore the laggard stocks.
Buying individual stocks frees you from the expense ratio. Unlike physical gold, you can trade gold mining stocks and ETFs in seconds. They are more liquid.
While these stocks’ performances revolve around gold prices, you can see differences. Some mining companies face business struggles that hurt their revenue and outlook.
A bad mining company can hurt your portfolio even if gold prices surge. However, mining companies can adapt to changing gold prices.
If gold prices fall, they can switch their focus to another metal. Once gold starts to recover, these companies can focus on gold again.
Gold Futures
Gold futures let you buy or sell gold at a set price. These contracts come in multiples of 100.
Futures traders agree to buy or sell at least 100 ounces of gold. You can’t agree to conduct a transaction with 101 ounces of gold. Investors will not find a middle ground between 100 and 200 ounces of gold.
These contracts can get expensive and involve leverage. Gold futures presents investors with a compelling option.
However, you should not start investing in gold via futures. Give yourself time to build experience with this asset through other choices.
Answering the Question “Should I Invest in Gold?”
Investors frequently ask themselves, “Should I invest in gold?” Recent inflation trends suggest gold can continue rising this year.
Want to learn more about gold and other assets? Continue reading this blog. It has plenty of resources to expand your knowledge.