The Best Way to Invest In Gold

There are many options available when choosing to invest in gold as part of your wealth portfolio. Expert opinions differ slightly on the best way for everyone, but they do all agree that gold is a fantastic asset to own.

 

One such option is gold mutual funds. For those who are leary of investing in physical gold, but still want the precious metal as part of their portfolio, gold mutual funds may be the alternative to choose. They hold stock of mining companies – typically established mines that produce verifiable and substantial quantities of gold annually. This option tends to be more moderate or conservative.

 

Another option of a more speculative nature is junior stocks. This level of stock is less likely to own productive mines and may be more explorative – with higher potential profits, but also with higher risk of loss. If your risk tolerance is broader and you can accept the possibility of losses of gold in exchange for the potential of triple-digit gains, this may be more your level of investment.

 

There is a recent substantial up tick in ETFs, exchange traded funds, which presents an interesting way to invest in gold. An ETF is a type of mutual fund that is traded on a stock exchange like other traditional stocks. The portfolio of the ETF is fixed in advance and doesn’t change. Gold bullion is the only asset in the two ETFs traded in the United States. Both offer a practical way to include gold in your investment portfolio.

 

For the more experienced and sophisticated investor, options and futures allow you to speculate in gold prices. In the options market, however, you can speculate on either rise or fall in gold prices. If you believe the price will rise, you will buy a “call”. A “put” is purchased when you believe the price of gold will fall. This market is complex and one must really understand how it works and be willing and able to risk the big fortunes that can be made, but can also be lost in an instant. Even investors experienced in options realize the futures market has an inherent nature of high risk that is too great for many of them.

 

Gold bullion is the ultimate expression of pure value. Many civilizations, history will tell us, have recognized the stability of the value of gold. The Egyptians buried massive amounts of it with their pharaohs as they were entombed believing it would be used in the afterlife. There have been great wars fought to raid holds of gold. The allure is that gold is the only real money and there is no government fiat that can change or control its value. The value of gold will rise based on the simple forces of supply and demand. Its profit potential will not be fast – it should be seen as a long term investment – but they can be great. The best forms of gold to own are one ounce coins – specifically the American Eagle.