Buying gold is a great idea if you want to stabilize your portfolio. This asset can defend your general wealth against the ravages of inflation. In addition, it has proven itself capable of generating impressive gains for its investors at different junctures. However, there are many ways to invest in gold. Knowing how to buy gold as an investment – the right way – usually requires the assistance of a reputable gold company.
Benefits of Gold Investing
It is important to think of gold as an investment. While some of the assets described here are actually forms of legal tender, this aspect of their nature should be ignored. Each piece of gold, whether in bar or coin form, should be treated as an investment which can lose or gain value.
Once you have invested in gold, you will experience various benefits. It you buy gold bullion, you will have a tangible asset that cannot evaporate the way that some stocks might do if the underlying company makes a serious mistake. If you choose to buy gold stocks or contribute to gold mutual funds or exchange-traded funds, you can also achieve considerable earnings when gold prices make their customary advances.
The primary benefit of gold investment is its protection versus inflation. Gold naturally grows in value as a currency like the US dollar weakens. Since there is a limited amount of gold in the world but an unlimited amount of paper currency, the gold price advances just like that of any other commodity. Unlike these other commodities, though, gold is not quickly consumed. Instead, it sits in your safe or in some other facility and acquires value.
There is more to gold, however, than a safety feature against inflation. It is not just any other commodity. There is also a high and growing demand for gold as a critical component in electronics. Actually, most computers, smart phones and other mobile device shave at least a small portion of gold in them to ensure the quality of their contacts. With demand for these devices growing rapidly, you can expect that gold will continue to find support for high prices.
How to Buy Gold as an Investment
The easiest way for experienced investors to invest in gold would be through the purchase of gold mining stocks. These companies are just like other companies, with balance sheets, fundamentals and bottom lines. Their product is gold. Even when gold prices are stagnant or going down, these companies can make money.
Some investors prefer to get a little closer to the underlying asset. They can buy gold exchange-traded funds (gold ETFs).These are similar to mutual funds but they also bear important similarities to stocks. The funds themselves invest the pooled money of multiple investors in both gold stocks and bullion. However, unlike mutual funds, investors can trade these ETF shares whenever they want if they need to enjoy the high liquidity of gold.
Finally, buying gold bullion is an increasingly popular option among both experienced and novice investors. There are drawbacks to owning physical gold. For example, you become responsible for the maintenance and storage of these assets. However, investors who choose this route of investment are often happy to manage these responsibilities in exchange for the ability to watch over their wealth personally.
Physical Gold Assets
If you want to buy physical gold, you should take steps to ensure that you only buy bullion. While non-bullion assets may be profitable, they are risky for investors who are not experts. Bullion, on the other hand, is certified to have a high purity or fineness level.
The American Gold Eagle is an easy choice for bullion investors. Though it is highly valued around the globe, it actually has a lower fineness rating than the legal tender gold coins that most other nations mint every year. The US Mint alloys the gold with copper and silver to create a coin that is more durable than gold coins from other countries.
However, countries such as China, Canada and Australia also mint gold coins. In addition to these options, you can also invest in gold bars sold by a variety of international corporations. These bars are as small as one gram and as large as several kilograms.
Investigating Gold Companies
Before you begin shopping for gold assets, make sure that the company that works with you is reliable. You can find out more about each company by investigating Better Business Bureau (BBB) reports, reading reports at TrustLink and examining customer satisfaction data.