Investing in gold might not be particularly sexy but it is a good idea nonetheless. Many investors won’t be interested in gold because it is not on the face of it particularly exciting. It is low risk and low yield and you’re unlikely to really make much money back on this investment – so why do it?
The answer is that physical gold unlike stocks and shares is able to hold its value even when the economy or markets are struggling. The only thing that can influence the value of gold one way or the other is fluctuations in the supply and this is only going to occur as a result of a new resource being discovered – which is generally fairly rare.
But just because you’re investing in physical gold, that doesn’t mean that you’re going to be guaranteeing yourself success. Read on and we’ll look at some top tips that will help you to ensure you invest in gold the right way.
When you invest in gold, you normally do so through a gold broker or custodian. The gold broker is someone who will buy your gold on your behalf and charge you a slightly inflated price in order to make a profit. This is normal of course – the company needs to make money somehow! – but you still need to make sure you shop around so that you don’t end up paying over the odds for your gold and thereby increasing your overheads and reducing your profits.
You also need to read reviews of gold companies so that you can be sure that the company you have chosen is reputable and trustworthy – it’s common to hear worrying stories of companies not providing gold withdrawals or not being entirely transparent about all of their fees.
While the broker is the company that you will use to buy the gold, the custodian is the company that will then store the gold for you. This is very convenient because it means you don’t have to find a separate vault for your gold and then arrange shipping.
But just as you need to be careful choosing a gold broker, you also need to do your research when selecting a gold custodian. Most important in that regard is choosing a company that has good security: you need to be sure that your gold is kept safe in a vault with top security, regular checks and ideally some kind of surveillance. All this will ensure that your gold isn’t likely to go missing.
Likewise, when your gold is shipped between locations, it’s important that it be carried by an armored vehicle and with an armed convoy that will be able to keep your belongings safe.
The next important tip when buying physical gold, is to ensure that you choose the right type of gold. Physical gold comes in a variety of forms and getting the right type will maximize your investment.
When you buy physical gold, you can choose between things like gold bullion (which is pure gold that will directly follow the market value), gold coin (which is often made of a combination of materials seeing as gold is too soft to be used for coinage) or even jewelry and numismatic (collectable) coins.
Choosing the right type of physical gold is an important way to maximize your returns and to make the most of your budget. Gold coins are the cheapest and easiest investment in many cases for instance, while gold jewelry can work well if you know what you’re doing.
One good type of gold is ETFS physical gold. ETF is a type of mutual fund – an exchange traded fund. In this case, the ETF will trade on the stock exchange like an ordinary stock however, you will nevertheless actually be getting gold for this. You can locate ETFs on the stock exchange by looking for the symbol GLD.
Simply by investing in this stock, you are investing in gold and you can profit as you normally would – only now you don’t need to worry about things like storing the gold.
This link will help explain a bit more about ETFs physical gold.
Tracking the price of gold is a very important tip when trading. This way, you will have a good idea of how much the gold you’re buying should be worth and you can then have a better idea as to whether you’re really getting a good deal. Keeping an eye on the value of gold is also smart for other reasons – it will help you to know when the best time to buy gold is, when the best time to sell it is and more!
Should you invest in gold? It’s fair to say that most people could benefit from adding some gold to their portfolio but that doesn’t mean they should invest solely in gold or even that gold should make up the lion’s share of their portfolio.
Gold is very stable and holds its value well but it is also low yield. This is a useful addition to your portfolio as a kind of insurance but if you want to earn as much as possible, then you need to make sure that you’re meanwhile investing in riskier assets too.
One particularly good option is to invest your money in both physical gold and gold stocks (see our article on gold stocks here). This way, you’ll be able to benefit from the price of gold going up or down and it’s a smart way to hedge your bets. If you invest in junior gold stocks, then you can potentially earn in triple digits!
Hopefully some of these tips will have helped you to better understand the best way to invest in gold. Take this advice and invest your money into gold and you should have a secure way of saving your cash and watching it grow!