Basic Guidelines for Gold Investment

From time immemorial, gold has been the currency of choice globally. This means that it is recognized as an asset of value worldwide. For this reason, many investors see gold investment as a viable business venture. 

These days, people are advised to invest in gold because it has a low correlation with other classes of assets which makes it a great long-term hedge against inflation. Furthermore, it is not affected by political instability or other forms of economic upheavals. Click here for more information on this assertion. 

Considering the benefits of investing in this precious metal, a good number of people are venturing into the gold market. In this article, therefore, we want to lend our voice to making your gold investment journey hiccup-free. Stay with us as we discuss some basic guidelines for investing in this shiny metal. 

5 Different Ways of Investing in Gold

There are many ways of investing in this yellow metal and they include buying physical bullion, investing in mining companies, futures and mutual funds, and jewelry.

Each of these methods of investing in gold has its pros and cons but some are better suited to some class of people than others. Let us briefly discuss these gold investment methods:

1. Gold Bullion 

This is the most popular way of owning gold directly. When people hear the term ‘gold bullion’ their mind goes to those huge gold bars housed in Fort Knox but that’s not entirely what it is.

Gold bullion comes in different forms which include bars, rounds, and coins, and can come in any size and shape. The determining factor of what constitutes this bullion is that it has been certified based on its purity and weight. 

While it can be emotionally satisfying to handle one’s investment in this precious metal, it is essential to note that this method is highly illiquid. This means that it cannot be easily converted to cash. Buying this yellow metal can also be cumbersome because of issues of storage and security.

That being said, however, if you have the storage facility and necessary security, this method of investment is a means of storing wealth. It has proven to have long-term benefits and a great return on investment. 

2. Gold Mutual Funds and ETFs 

This is one alternative to owning the yellow metal physically. One can always invest in an asset-backed by gold in an Exchange Traded Fund (ETF). Each share of the asset invested represents a specified amount of the precious metal for example a tent of one ounce of gold. 

You can buy these funds and sell them just like any asset on the stock market. You can also trade through a brokerage account or an IRA (Individual Retirement Account). This is a much easier method that is also cost-effective because the investor gets the benefits of the precious metal without the hassles of owning the physical commodity. 

Most mutual funds include bullion and precious metal companies in their portfolios. However, there are a few that focus only on investing in gold. Visit this site: https://www.cbsnews.com/ for more information on the two options. 

3. Gold Futures and Options

Just as with regular futures, this is a contract to buy and/or sell a certain quantity of this yellow metal at a particular price on an agreed-upon future date.

This method of investing in the yellow metal is quite risky with a lot of intricacies just as with other assets. It is therefore recommended that rookies do not dabble in this terrain of investment. 

4. Investing in Companies that Mine and Refine Gold 

This is another way of investing in this precious metal because these companies profit from the rise in the market price of the commodity.

This method is considered to carry a lower risk for the investor than other methods. However, the investor must do their due diligence so as not to invest in an ailing company. This is because the fate of the company determines how much profit one can make.

Conversely, this also determines the level of loss should anything go wrong with the company. 

5. Buying Gold Jewellery

Many people believe that buying gold jewelry is a form of investing in yellow metal.

However, there have been arguments on many fronts that this is not a pure form of investment because there is always a substantial markup in the price of gold jewelry over its real value. So unless you are a jeweler, this is not a highly profitable way of investing in this precious commodity. 

How to Choose the Best Gold Investment Company

We have discussed albeit briefly, the various means of investing in gold. It is important to note that all these gold investment methods will require you engage the services of a professional (unless you are one). 

For some methods, you are compelled by law to work with brokers and precious metal companies. For other ways, however, it is just best practice to engage people who are experts in the industry. 

That being said, therefore, below are tips for getting the best gold investment company to work with:

1. Carry out Thorough Research 

Investing in gold is not a cheap venture therefore you have to carry out thorough research.

You can start online by looking up reviews on independent professional forums. You can also check out reviews from expert sites that post company reviews such as this Schiffgold review and others of its kind. 

This will help you understand what the companies are all about. In the course of your research also, do not forget to check out what their clients have to say about them. 

2. Check out their Legitimacy

As you carry out your research, one thing you must look out for is the legitimacy of the company that you intend to work with.

Ensure that you see documents and certificates that show that they are registered with the proper authorities. This will save you the pain of investing with frauds. 

3. Check out their Fees and Terms

Most people make the mistake of not reading the fine prints in an agreement in the middle of the transaction they discover terms and conditions that they do not agree with.

To avoid such an occurrence, ensure that you read the fine print; you can even consult a legal expert to help you go through the agreement to be sure that you understand everything in it and you are okay with it. 

Conclusion  

Gold investment is a laudable venture but should not be entered into without due diligence.

The gold investment methods we have shared in this article are just the tip of the iceberg. Make sure that you take out time to research more and get adequate information before you commit your funds to any of the gold investment methods we have discussed herein.