In the world of investing gold is what’s known as a commodity. Commodities are raw materials or agricultural products that can be bought, sold, or traded. It’s a category of goods that includes everything from coffee to quartz. Gold has always been one of the most highly prized minerals on Earth, especially since it only exists in fixed amounts. The Earth isn’t making any more of it. For this reason, gold’s value tends to rise. Read on to find out how to invest in this valuable commodity for maximum returns.
Opportunities to make money investing in gold are at your fingertips.
Photo by Sharon McCutcheon on Unsplash
Today, investors buy gold mainly as a hedge against inflation. Unlike currencies and securities (stocks), gold is in limited supply. Because of its scarcity, gold serves as a hedge against inflation because an ounce of gold can buy roughly the same amount of goods today as it did 100 years ago. That’s not the case, of course, with a dollar bill. In fact, the value of gold typically increases as the value of a dollar falls.
Gold is typically seen as a secure investment, because it’s less prone to major swings in price. While the stock market can be affected by things like political unrest and other crises, gold’s price is comparatively stable. This makes it a powerful tool to mitigate risk when investing. It’s a sound investment on its own, and as an addition to a diversified portfolio.
In the last 50 years, the price of gold has soared. Since 1970, when its price was $63, the price of gold has climbed to over $2000. That’s a gain of 2825%.
You don’t have to buy a gold bar to invest in gold, although that’s one way to do. Here are the best ways to add gold to your portfolio, both by direct and indirect investing.
With a gold ETF, you don’t have to worry about storing real gold or having your gold stolen. It’s easy to buy and sell ETFs that deal in gold using an online discount broker. You can even include gold ETFs in your Roth IRA so your earnings can grow tax-free. There are excellent gold ETF options traded on the New York Stock Exchange and global exchanges around the world.
A more indirect way to invest in gold is via mining companies. You can purchase mining company stocks or a mutual fund or ETF that focuses on companies that mine precious metals. A good thing to note: although gold is perhaps the most common investment metal, silver, platinum and other metals offer similar opportunities.
This is perhaps the best-known form of direct gold ownership. Many people think of gold bullion as the large gold bars held at Fort Knox. Actually, gold bullion is any form of pure, or nearly pure, gold that has been certified for its weight and purity. This includes coins, bars, and nuggets of any size.
For those who want a different kind of investing experience altogether, you can still go out and buy real gold in the form of gold coins. This option offers slightly better liquidity than other options, meaning you can sell them to a coin dealer if you need cash quickly.
About 49% of the global gold production is used to make jewelry. Investing in quality pieces from a dealer you trust is one way to invest in gold and wear it, too! One of the disadvantages of investing in gold this way is that jewelry has a retail markup. It is also at risk of being stolen. Nonetheless, jewelry ownership provides the most enjoyable way to own gold, even if it is not the most profitable from an investment standpoint.
Gold is a great investment that consistently rises in value over the long term. It’s also a good way to protect your wealth and your portfolio. In fact, with all the advantages, there’s really no reason not to invest in gold. Start looking for gold investment opportunities by searching online today.
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