Gold investing has been very profitable during times of uncertainty and despite it being called a barbarous relic, it still offers an excellent store of value and protection against inflation. Gold‘s price performance has historically been reverse to that of the general stock market, and it tends to outperform traditional investments like stocks and bonds during times of economic and political upheaval.
There are many ways to invest in gold, and the right one depends on the personality as well as the investment structure of the investor taking a position. The following five investment strategies offer simple ways for the average person to invest in gold.
1) Physical Gold Bullion
Buy physical gold bullion from a reputable dealer. There are plenty of local coin merchants and online gold dealers that will sell you standard bullion coins. Look for a dealer that charges a reasonable markup which shouldn’t be more than 5% over the spot price.
There are a wide variety of gold bullion coins to choose from but as an investor you should only buy commonly traded coins, including the South African Krugerrand, the Canadian Maple Leaf, the American Golden Eagle, and the Australian gold Kangaroo among others. Commonly traded coins are easier to sell and they trade close to the spot price.
Numismatic coins and collector items can fluctuate widely in price and you will be paying for its rarity and not for its gold content. You may have to pay up to a 50% premium over the spot price if you buy a collector gold coin. Remember you are buying the coin for its gold content and not its collector value.
2) Gold ETFs
Gold Exchange traded funds (ETFs) are traded on a stock exchange and can be bought from a trading platform just like any other shares. This option is very convenient but it includes some risk since you are relaying on a custodian to actually hold your gold. Some of the more popular EFTs include, SPDR Gold Shares (GLD), ishares Gold trust (IAU), and the Central Fund of Canada (CEF).
3) Online Gold Account
GoldMoney founded by James Turk is an online gold account that allows investors to transfer dollars to an account and convert them into grams of gold with minimal storage costs. Goldmoney is located in Jersey, one of the English Channel Islands, and they offer allocated storage of gold in vaults located in London, Zurich and Hong Kong.
The vaults are owned and operated by VIA MAT, and an independent audit of the gold bars is conducted every quarter. Investors in this program include DRD Gold Limited in South Africa, and IAM Gold of Canada.
4) The Perth Mint Certificate Program
The Perth Mint Certificate program offers allocated ownership of gold in Australia. The Perth Mint is the only storage program sponsored by a government. The minimum requirement for opening an account is $10,000 or AUD 5,000 for Australian and New Zealand residents. This program allows investors to buy gold at the market spot price and offers free allocated storage. It charges no sales tax, and allows you to take your gold out of the country of Australia where it is stored.
5) Gold Mining Stocks
Gold mining stocks offer leverage to gold as their profits go up more than gold bullion itself. Because of its leverage, gold mining companies offer more upside potential than physical gold but also more risk. There a hundreds of gold companies to choose from, but some of the senior gold miners in North America include Barrick Gold (ABX), Newmont Mining (NEM), Goldcorp (GG), Kinross Gold (KGC) among many others.
There are many ways to invest in gold, and the right one depends on the personality as well as the investment structure of the investor taking a position. The following five investment strategies offer simple ways for the average person to invest in gold.
1) Physical Gold Bullion
Buy physical gold bullion from a reputable dealer. There are plenty of local coin merchants and online gold dealers that will sell you standard bullion coins. Look for a dealer that charges a reasonable markup which shouldn’t be more than 5% over the spot price.
There are a wide variety of gold bullion coins to choose from but as an investor you should only buy commonly traded coins, including the South African Krugerrand, the Canadian Maple Leaf, the American Golden Eagle, and the Australian gold Kangaroo among others. Commonly traded coins are easier to sell and they trade close to the spot price.
Numismatic coins and collector items can fluctuate widely in price and you will be paying for its rarity and not for its gold content. You may have to pay up to a 50% premium over the spot price if you buy a collector gold coin. Remember you are buying the coin for its gold content and not its collector value.
2) Gold ETFs
Gold Exchange traded funds (ETFs) are traded on a stock exchange and can be bought from a trading platform just like any other shares. This option is very convenient but it includes some risk since you are relaying on a custodian to actually hold your gold. Some of the more popular EFTs include, SPDR Gold Shares (GLD), ishares Gold trust (IAU), and the Central Fund of Canada (CEF).
3) Online Gold Account
GoldMoney founded by James Turk is an online gold account that allows investors to transfer dollars to an account and convert them into grams of gold with minimal storage costs. Goldmoney is located in Jersey, one of the English Channel Islands, and they offer allocated storage of gold in vaults located in London, Zurich and Hong Kong.
The vaults are owned and operated by VIA MAT, and an independent audit of the gold bars is conducted every quarter. Investors in this program include DRD Gold Limited in South Africa, and IAM Gold of Canada.
4) The Perth Mint Certificate Program
The Perth Mint Certificate program offers allocated ownership of gold in Australia. The Perth Mint is the only storage program sponsored by a government. The minimum requirement for opening an account is $10,000 or AUD 5,000 for Australian and New Zealand residents. This program allows investors to buy gold at the market spot price and offers free allocated storage. It charges no sales tax, and allows you to take your gold out of the country of Australia where it is stored.
5) Gold Mining Stocks
Gold mining stocks offer leverage to gold as their profits go up more than gold bullion itself. Because of its leverage, gold mining companies offer more upside potential than physical gold but also more risk. There a hundreds of gold companies to choose from, but some of the senior gold miners in North America include Barrick Gold (ABX), Newmont Mining (NEM), Goldcorp (GG), Kinross Gold (KGC) among many others.
