There are many reasons an investor might be interested in gold. It has been trusted by human cultures as a steady and reliable form of currency for thousands of years. Even today, it still sits firmly on the safer end of the investment spectrum; gold is a popular hedge against inflation and risk, making it a popular choice among cautious and risk-averse investors.
Though interest in gold as an investment is rising, many self-educated investors find themselves wondering where to start or what their options are when it comes to buying, trading, or investing in gold. Here are a few of the most popular ways people are investing in gold in 2022:
- Buying Bullion
- Bullion is physical gold, often in the form of coins, bars, or ingots. Bullion can be purchased in person at brick-and-mortar bullion dealerships and refineries, or it can be bought online through a multitude of new apps.
- If you’re looking to find ethically sourced gold from an accredited dealer or refiner, your search may take a bit longer and require more legwork, but with a bit of determination and strong research skills, it can be accomplished. Check to see if the gold you’re interested in buying was certified by the Fairmined Initiative or a similar certification system.
- The main benefit of using apps to buy gold is convenience. You can do it all from the comfort of your phone, and you don’t have to worry about storing your gold.
- These apps often sell unallocated gold, a type of investment that is backed by physical gold but does not transfer into the buyer’s physical possession. However, just because you can’t hold something doesn’t mean it lacks legitimate value (as some bullion purists would have you believe).
- Storing bullion can be a challenge for some buyers. Storing bullion in your home comes with obvious security risks, while storing it at an external site can be a costly expense. Fortunately, there are high-security depositories for precious metals that allow buyers to store their bullion at a relatively affordable rate.
- Investing in Gold Stocks and Companies
- Instead of investing in gold directly, you can invest in stocks or companies in the gold space. This includes miners, dealers, refiners, and more. This approach would be beneficial for those accustomed to traditional investments and those who don’t want to worry about storing their gold.
- Stock prices for gold companies can be affected by a multitude of factors, making this a less steady choice than investing in gold itself, but it can be a lucrative approach for savvy investors.
- Gold mining companies are a popular choice for investments in gold stocks. Several of the most prominent include Newmont (NYSE: NEM), Barrick (NYSE: GOLD), Polyus (MCX: PLZL), and AngloGold Ashanti (NYSE: AU). As is the case with traditional investments, investing in smaller companies incurs a larger risk.
- Investing in Gold ETFs
- A gold ETF (or exchange-traded fund) is a type of commodity fund that includes assets backed by gold. These bundled investments, which are traded like stocks, can provide diversity to an investor’s portfolio.
- Investing in gold ETFs is a faster, cheaper, and more convenient option than buying and storing gold bullion.
- Placing trust in an outside company has obvious disadvantages; companies can default, go bankrupt, close down, sometimes without much in the way of warning. However, lower management costs and a reduced burden of research and analysis make ETFs an increasingly popular choice among gold investors.
- Trading Gold on the Futures or Derivatives Market
- Though this option is typically best for experienced, professional, or institutional traders, it is becoming more openly available to everyday traders and investors with the advent of new apps and platforms.
- Trading gold on the futures or derivatives market can be a great strategy for anyone looking to make a large number of trades (or a large amount of profit) in a short time.
- As a long-term option, your results may vary, but it holds the potential for great success in the short term.
- Investing in a Gold IRA
- A Gold IRA is an individual retirement investment account that holds some amount of physical gold.
- The classification excludes accounts holding only paper-based assets, including mining stocks and ETFs – it must be real, physical gold bullion. The exact percentage of the account’s gold allocation is not important, but it must contain some physical gold.
- Gold IRAs are particularly beneficial for retirement investors looking to manage risks and diversify their portfolios.
- Gold has a historically low correlation with the stock market. This makes it a valuable and reliable hedge against fluctuations in the market, keeping the volatility and unpredictability of stocks out of your portfolio.
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