Investing In Gold: 5 Ways To Invest
Humans have relied on gold for thousands of years for its ornamental value, as well as facilitating trade much before the advent of paper currency. To put the time frame into some perspective, gold was first used as currency 700 odd years before the birth of Christ. This yellow metal has both intrinsic as well as aesthetic value in abundance.
History has proven that gold has been able to hold value better than most assets that it has been compared to. Gold is revered for its value all over the world even today. The only change is that you have several choices when it comes to investing in gold.
5 ways you can invest in gold
Investing in gold has seen quite the upswing in recent times, and it’s a great time to invest right now. The global economy is slowing down in 2019, which means that inflation is bound to move up slightly, increasing gold prices. While earlier the only way you could own gold was to buy and store it at your premises, now there are a lot more ways you can buy gold.
Let’s take a look at all the options that you have when you want to invest in gold.
A lot of people prefer to own physical gold, which is why they buy it in the form of bullion outright. There are various vendors from which you can purchase bullion, both government and private-owned. While most people refer to bars when they say bullion, it also comes in coins.
Bullion coins are produced all over the world, and different countries have their own unique identifiers. The U.S., for example, has American Eagle which comes in 1/10, ¼, ½, and 1 ounce. Bullion coins and based are traded based on their weight. Buying a bullion bar offers the buyer a slight advantage. Since you’re buying a larger quantity of gold with a bar, you avoid the higher markup of a coin or an ingot.
The problem with owning bullion is security – you need to be able to protect your investments. Security and insurance can end up taking a sizeable chunk of money out of your investment plans. But for people who buy gold for its physical presence, there is no substitute.
An alternative to this you could consider would be investing in digital gold. Digital gold brings security and convenience for people wanting to invest in physical gold. Brands like OneGold let you buy physical gold that gives you direct ownership of the metal, is fully insured and even has an AutoInvest option.
People who are interested in gold coins and their history could look into buying numismatic coins. There are not the same as bullion because their value is not just determined by their weight, but also their historical significance and rarity. These coins may have been old, produced in small quantities, or have dates of significance, which can considerably push their value higher.
Numismatic coins are possibly the highest levels of private wealth you can own in the country today. If history intrigues you, this might be a fun way to invest in gold. The problem with numismatic coins is that you need to find trusted gold vendors to buy them from. The reason being that the value of numismatic coins determined by their authenticity.
A bank is an entity that already provides security for various important documents like money, wills, and other forms of investments. It makes sense to let the bank take care of your gold investments as well. A gold account in a bank makes your invested gold work for your benefit in different ways. When making a digital gold purchase, here are a few terms you need to know.
Allocated – Once gold is purchased, title to gold is passed to the buyer and is held at a secure location like the safe, or a guarded vault. You can redeem and take possession at any time.
Unallocated – Once purchased, the precious metal remains the property of the issuer and the investor is essentially a creditor. Because unallocated gold remains the property of the issuer you can not redeem the gold.
The risks of the allocated are lower since the gold is not invested and remains in possession of the vault. Unallocated precious metals are riskier but can be more rewarding. You stand to gain much more from the bank investing your gold.
OneGold offers fully allocated segregated precious metals.
If you just want to invest in gold without wanting to hold it directly, then gold exchange-traded funds are another option to consider. Gold ETFs give you high liquidity, and you can buy any amount you desire. The ETF owns and stores the physical gold acting as a custodian for ETF share values.
There are apparent advantages to gold ETFs, like being able to buy or sell shares when the stock exchange is open. The transaction costs are considerably lesser than transacting with physical bullion. But, at the end of the day, ETFs are just financial assets, and you don’t have any claim to the gold the ETF holds.
This completely invalidates a critical reason for holding on to gold – for protection during crises. For long-term investors, this completely defeats the purpose of holding on to gold.
Gold Futures Contracts
Gold futures assets are high risk, high reward gold investment component. Gold futures let you invest in gold without paying the full amount. Basically, gold future is a contract between two parties where the buyer agrees to take delivery of the gold on a specific date in the future by making an initial payment. The payment to the vendor is completed on the date of acquisition.
There are several advantages to gold futures for the buyer. For instance, you don’t have to worry about secure storage right away. Gold futures contracts offer high liquidity, and you can short sell it as well.
But the risks are considerable as well. Default risk means that people might make a profit but won’t be able to collect on it. Gold futures are highly volatile; markets can crash or go through extended phases of instability.
Finally, gold futures have an inherent price differential which might misrepresent their actual value. For example, signing a futures contract at US$2.25 more than the gold price 30 days before closing would mean its value will drop by US$0.075 till the closing date.
We have detailed the most common ways to invest in gold and each method carries its own merits as well as risks. Gold is an asset that has only increased in value over the years and can work well as a long-term investment asset. If you are looking to diversify your investment portfolio, gold is definitely something that you can rely on when other methods fail. Investing in gold means that you are tapping into the precious metals market, which is lucrative and offers great returns. Gold also acts as a safeguard against inflation or economic upheavals.
Investing in gold is a worthwhile idea to consider not just to diversify your investments, but as something you can fall back on in times of need.
How to Start Gold Investing with OneGold
With a deep understanding of precious metals that is unmatched in any competing partnership, APMEX and Sprott came together with a shared vision for the evolution of precious metals ownership. OneGold is the result of the knowledge, experience, and resources of these two globally recognized partners.
- Create a Free Account at OneGold.com
- Choose between the U.S. or Vaultchain precious metals investment metals.
- Low premiums & tight spreads.
- Purchase using Bitcoin, Check, Credit Card or connect your Bank Account.
- No need to wait on funds clearing, you can “Buy Now, Pay Later”.
- Fully allocated and segregated investment grade precious metals.
- Annual storage fees are Silver .30% & Gold .12%