There are 2 schools of thought. One advocates that gold as a hedge against inflation, a stock market disaster and a weakening dollar. The other includes Warren Buffett, says this metal has no role.
Investment in Gold is a profitable way to invest your money and is an incredible way of diversifying risk. Like other investments, how will you be determined by your investment strategy? How will you be successful in making your strategy sound?
The fundamentals of the Gold Investment
Have you heard about bullion? This is a specific quantity of precious metal, like gold, and it comes in bulk. The bullion is measured by the weight it has and is bought and sold in the forms of bars or coins. Usually, gold is treated as small grains.
If we talk about coins, these coins are made from gold and some other precious metals. They are bought for investment purpose. The coin’s value is determined by their bullion content. The bullion price tends to vary every day.
What are the ways of investing in Gold?
There are some ways of Gold Investment. These are as follows:
- Direct Ownership of Gold
Bullion is the ultimate expression or predicted value. The value of gold increases or decreases according to supply and demand factors and is not affected by interest rates. The reason of downfall of owing gold is that it trades with bid prices. If you want to invest for the purpose of making money, do not expect to get a quick profit. Normally, you end up by purchasing at retail and sell it at a wholesale rate. But, in the case of gold, it is not a theoretical asset, but an asset that is preferred for holding value. There are some best types of ownership.
- South African Krugerrands
- American Eagles
- Canadian Maple Leafs
- Gold Exchange Traded Funds
As the exchange trade funds or ETFs explodes, there is another exciting method to invest in gold. These are mutual funds that deal with the stock exchange, same as with other stocks. The portfolio of ETEs has been fixed and would not change. The way discussed is considered to be a practical way of investing in gold within your portfolio.
- Gold Mutual Funds
Some people are wary of investment but still, they want to make the investment. One of the best ways is to try at gold mutual funds. This comprises of portfolios of multiple gold stocks i.e. junior and senior stocks. Senior ones, mostly, are highly capitalized companies that contain profitable record and established mines that are considered to be producing large quantity gold.
- Junior Gold Stocks
Junior stocks are speculative level, less likely to own productive mines, and mostly used for exploring the markets. The way offers potential profits but there is also a risk of loss. Generally, capitalization is low as compared with senior stocks. If you can tolerate risk, then you should choose junior stock gold as a way. You are required to make yourself able to accept the losses but there are chances that you reap triple digit gains.
Hoping this article help you to well understand the basic concepts and fundamentals of gold investments. Feel free to share points in your mind.