Investors who want to invest in gold have three main options. They can buy the actual gold, like gold coins. Another option is to buy shares of a mutual fund or exchange-traded fund (ETF) that follows the price of gold. Lastly, investors can trade in the commodities market using futures and options. Regular investors often choose to buy gold coins, while more experienced investors use strategies involving options on gold futures.
Table of Contents:
- Buying Gold Bullion
- Buying Gold Funds
- Buying Gold Futures Options
- Buying Gold Mining Stocks
- Step-by-Step Invest in Gold for Beginners
- How to Invest in Gold Online?
- How to Invest in Gold on the Stock Market?
Buying Gold Bullion
Buying gold is easier for regular people compared to other things you might invest in. You can get actual gold, called gold bullion, in the form of coins or bars. You can buy it from a precious metals dealer, a bank, or a brokerage.
Gold bars come in different sizes, from small ones to big ones. But if you’re new to this, it’s often better to go for gold coins. These are not old collector’s items; they are new and priced based on how much gold they have, plus a bit extra. Most people go for well-known gold coins like the South African Krugerrand, the American Eagle, or the Canadian Maple Leaf. Just make sure you’re buying from a trustworthy dealer, either in person or online. If you have gold coins, you need to keep them safe, either in a safe at home or in a safe deposit box at a bank. And don’t forget to get insurance for them.
Some people also invest in gold by buying gold jewelry. This way, you get to wear and enjoy the gold. Gold jewelry often has other precious gems and metals, making it even more valuable and good-looking. People sometimes pass down gold jewelry as a family tradition. But if you’re buying gold just as an investment, jewelry might not be the best choice because it’s usually more expensive than the actual gold is worth. This is because you’re paying for the craftsmanship and the store’s markup. Always check how pure the gold is before buying jewelry so you know what you’re paying for.
If you have gold jewelry, it’s usually covered by most home insurance policies. This is helpful if it gets lost or stolen.
Buying Gold Funds
While owning physical gold is more practical than having things like barrels of oil or crates of soybeans, it comes with its own challenges. There are fees for buying and selling, costs for storing it, and the need for insurance. For people who want an easier and less expensive way to get into the gold market, mutual funds and exchange-traded funds (ETFs) can be a good option.
Take SPDR Gold Shares (GLD), for instance. It’s one of the oldest ETFs for gold and started in 2004. You can buy or sell its shares on the New York Stock Exchange just like you would with stocks. Each share of this ETF represents a small part of an ounce of gold. For example, if gold is worth around $1,300 per ounce, the GLD ETF might be around $130 per share. GLD focuses only on owning actual gold, so it gives you a direct link to how the metal’s price is changing. Some other funds invest in both gold and shares of companies in the gold business, like mining or refining.
Gold stocks, or shares in gold-related companies, can go up and down more quickly than the price of gold itself. Also, these companies can face issues not related to gold prices, like political problems or environmental concerns. So, if you invest in an ETF that holds gold stocks, it’s riskier, but it can offer more chances for your investment to grow—something that just owning physical gold doesn’t provide.
Buying Gold Futures Options
For experienced investors who want to be careful with their money, there are other ways to get into gold without risking a lot. One option is to use contracts called options on gold futures or options on a gold ETF.
These contracts give you the right (but not the duty) to buy or sell something, like gold, at a specific price for a set amount of time. Options can be used whether you think the price of gold will go up or down. If your prediction is wrong, the most you can lose is the upfront payment you made to get the contract, called the premium.
In the U.S., you can find these options on the Chicago Mercantile Exchange. You can buy and sell them through a futures broker. There are also options for the SPDR Gold Shares ETF that investors can trade in a regular brokerage account, as long as the account is approved for options trading. Some traders prefer to buy and sell gold futures contracts directly on the Chicago Mercantile Exchange to speculate on short-term changes in the price of gold.
Buying Gold Mining Stocks
If you can’t actually own any gold, you can still invest in gold mining stocks. But be aware, that these stocks don’t always go up or down with the price of gold itself. That’s because the success or failure of mining companies depends on how well they run their business and make money. If the companies you invest in don’t do well, you won’t have the actual gold, just shares in the company. So, it’s a bit riskier.
As For Conclusion
If you’re getting gold to spread out your investments, go for ETFs. But if you want a safety net for a big crisis affecting the whole system, it’s better to have the actual gold.
How to Invest in Gold for Beginners?
Learn About Gold Investment: Understand the good and not-so-good things about investing in gold. Remember, the price of gold can go up and down, just like other things you might invest in.
Pick the Right Way to Invest: Figure out if you want to invest in actual gold, gold ETFs, gold mutual funds, gold futures, gold options, or gold mining stocks. Each has its own good and not-so-good points.
Find a Trustworthy Seller: If you’re getting physical gold, make sure to buy it from someone trustworthy to avoid scams.
Get the Gold: Once you know how you want to invest and find a good seller, go ahead and make the purchase. If you’re getting gold ETFs or mutual funds, you can do this through your brokerage account.
Keep Your Gold Safe: If you bought physical gold, make sure to store it in a safe place, like a home safe or a bank deposit box.
Watch Your Investment: Pay attention to how the market is doing and how your gold investment is performing.
Sell at the Right Time: Just like with anything you invest in, try to buy when the price is low and sell when it’s high. Keep an eye on the market and sell your gold when it can make you a profit.
How to Invest in Gold Online?
Investing in gold online can be a smart way to mix up your investments. Here’s a simple guide on how to do it:
- Learn the Basics: Understand the different ways to invest in gold online, like using gold ETFs, gold mutual funds, or digital gold.
- Pick an Online Platform: Choose a website or app where you can invest in gold. It could be a regular online investing site or one made just for gold.
- Open an Account: Sign up on the chosen platform by giving some personal info and agreeing to their rules.
- Put Money In Your Account: After you open your account, add money to it. You can usually do this with a bank transfer.
- Choose Your Gold Investment: Decide if you want to invest in a gold ETF, gold mutual fund, or digital gold. Each has its own good and not-so-good parts.
- Make the Purchase: Once you know what you want, buy your gold through the platform.
- Keep an Eye on Your Investment: Watch how your gold investment is doing and make changes if needed.
How to Invest in Gold on the Stock Market?
Investing in gold on the stock market can be done in a few ways:
- Gold ETFs and Mutual Funds: These are like bundles of gold or shares in gold companies. You can buy and sell them on the stock market.
- Gold Mining Stocks: These are shares in companies that dig up gold. The value of these stocks goes up and down with the price of gold and how well the company mines gold.
- Gold Futures and Options: These are contracts that let you buy or sell gold at a set price in the future.
Here’s how you can start:
- Open a Brokerage Account: You need an account with a brokerage to trade ETFs, stocks, futures, and options.
- Pick Your Investment: Decide if you want to invest in a gold ETF, a gold mutual fund, gold mining stocks, or gold futures and options.
- Buy Your Investment: Once you know what you want, use your brokerage account to make the purchase.
- Watch Your Investment: Keep an eye on how your investment is doing and what’s happening with the price of gold.