What Are Gold Funds?

Gold investment is one of the most secure investments because it real money but with guarantee that its value cannot be controlled or changed by government, its activities or  underlying reason for going off gold standard. It is not even threatened by the happenings in global economy. The value of gold rises or falls based on pure forces of demand and supply no matter the circulation or interest rates of major currencies.

The only disadvantage to gold ownership is that it is inclined to trade with widespread between the bidding and ask price. You cannot therefore expect to turn fast profit. Gold is purchased in retail and sold at wholesale hence you require big price jump so as to break even in gold investing.

 You should not however see gold as speculative asset, and always make sure to check gold IRA companies reviews. It is an excellent defensive asset in holding value. The value of currency will at times but at such times, gold becomes best way to preserve value.  Most times people who invest in gold go for coins and bars. You however make gold investments in these ways:

Exchange Traded Funds

Also called ETFs, these funds have emerged to be an interesting alternative to invest in gold. An ETF is a kind of mutual fund. It trades on stock exchange like ordinary stock.   The exact portfolio of ETFs is fixed in advance therefore does not change.  Interestingly two gold ETFs trading in US hold gold bullion as the only asset. Either of them presents those who invest in the mutual fund a practical way to hold gold in investment portfolio.

Gold mutual funds

Mutual funds are for people keen on making gold investment but are hesitant to buy physical gold but they still need some exposure to precious metal. Gold mutual funds are an alternative to such investors since they hold portfolios of gold stocks. These stocks are those of companies that mine gold.  There are number of senior stocks.

Senior in gold investment terms is large well capitalized company which has been in existence for several years and has profitable track record. They own established mines known for producing large quantities of gold every year.  Many investors consider choosing such companies to be more conservative or moderate play compared to picking cheap shares belonging to firms that are fairly young.

Junior gold stocks

This is a more speculative level of stock. Junior stocks are unlikely to own productive mines. Junior gold stocks as gold investment might be exploration plays with higher potential for profits but the risk of loss is even greater. Capitalization for junior stocks likely will be smaller than the capitalization of senior gold stocks.  This is a range of investment for the investors with broader tolerance risk. These are investors who have accepted that there is likely to be gold based losses in exchange of potential for triple digit gain.

Gold options and futures

Options and futures are suitable for experienced investors who are highly sophisticated. Options allow investors to speculate the gold prices. However, in options market, you may speculate on the price movements in any direction.

Buying a call means that you hope prices will raise. A call will fix purchase price. If the price goes higher, the margin between fixed option price and the current market price will be greater.

Buying a put means that you are expecting price to fall. Gold investment through options, according to Birch Gold Group company, is very risky because chances or losing are high. Options market requires experience, patience and understanding since most of the options are bought and expire worthless. Options market generally possesses bad and good traits. The good one is that they help investors to control large investment with just small and limited cash.

 Bad trait is that the options will expire within fixed period thus the value of option disappears as expiration time draws near.

Investing in gold therefore requires careful weighing to make good decision.

How To Solve The Risks Of Gold Investment

The high and ever increasing price of gold makes the investment decision to be confusing.  There is an urgency to invest so as to get the benefits therefore people have different ideas on how to do it.   Most likely you will invest in gold bars, coins or bullion funds. However you need to understand these likely gains and risks:

Gold bars and coins

On instinctive level, it is attractive for most investors, to buy physical touchable gold.  It makes them to have hard asset whose value will surge should something terrible hit the world economy within their reach.  

Risk

Storing gold on your own is risky, expensive and complicated.

Solution

protecting your gold investmentBanks can hold gold for you in registered and insured vaults at a small percentage fee of gold value each year. You may also hold the gold yourself like in safety deposit bank in a bank that you can get at around $100 a year. Whether you keep the gold at home or safety deposit box, you should have your gold investment insured. When you have a larger amount of gold, it means that you need additional insurance premiums although insurers do not charge a lot of money if you keep it in safety deposit box.

If you keep larger bars, you have eradicated them from world registered storage system meaning there cannot be guarantee about their purity. You will have to pay in order to have the gold bars melted down by authorized refiners, re-poured and their quality audited before you are allowed to sell them.

Limitation

Both coins and bars sell for around 5 per cent premium over price of gold they contain plus dealer commissions and sales taxes. There is also cost of insurance and storage. Government minted coins like South African Krugerrand or Canadian Maple Leaf are recognized by the coin dealers in the world. Reputable dealers will however ask to see detailed ownership documentation before they buy coins from you.

Bullion funds

Bullion finds in gold investment are exchange traded funds (ETFs) or mutual funds  whose underlying assets can be  physical gold, futures or certificates  that can directly be exchanged for gold. Their value tracks price of underlying gold minus annual management expenses (that run from 0.4% for ETFs up to 3%   for some of mutual funds).

You can quickly move in and move out of the holdings. You can buy and sell mutual fund units daily, while you can trade ETFs all day on stock market similar to the stocks.  However, you should be aware that you incur broker fees each time trade in ETFs. Broker fees might run from $5-30 for each trade.

Risk

If the fund provider or fund goes under, the money and gold will disappear.

Solution

When making gold investment, ensure that the gold that is held in your bullion fund is "allocated." This means that it belongs to investors but not to bank that stores it. When gold is allocated, there is nothing to worry you. If anything wrong happens to the fund, it’s considered your gold but not that of the fund or its creditors

Limitation

It is not all the bullion funds that strictly invest physical gold. Portions of assets for some funds are held in other metals, cash and gold-mining equities. If you will want pure play in gold price, ensure that the fund you will buy is committed to hold all assets in physical gold within a fault. There are a number of funds that do that for gold bullion fund and others for Gold Bullion ETF.

 When investing in gold, always ensure that you underhand the pros and cons of your chosen way to invest and other in case you change your mind.

Tips For Buying Gold For Investment

If gold investment is an idea that appeals to you but you have never tried it, you may not even know where you will start. Even seasoned investors who have never invested in gold find themselves lost and have to find helpful that will help them move forward.  Information on gold investment is what will make you understand where to find gold, strategies to employ and gains of buying gold.  It is important to take your time so that you understand the following:

Why invest in gold?

tips for buying gold for investmentMany people know that it is important to invest their money but do not know how they can do especially for gold. It is no doubt that gold in a good investment but do not commit your money before understanding the reason why to invest in it. Gold has always been a strong symbol of wealth from ancient times and it is likely that it will be considered to be one of precious metals all over the world for many years to come.

There are many positives of gold investment whether as a safe way of investing some of the capital or as part of balanced investment strategy. Some of reasons to buy gold depend on currency economic climate although there are certain advantages to buy gold which are valid at that time. If you are not sure as to whether it is good to buy gold or you want to do some confirmation, it is essential that you find enough information to help you make a good decision.

Considerations before buying gold

It is easy to say how good it will be to invest in gold. It is however not easy to go out there and start buying. Buying gold is a way of investing money and whenever you invest, you ought to have a strategy that will dictate exactly what to and why. Buying gold is a straightforward way of investing but you will still need plans of some sort.

For starters, you will need to get clearly defined goals about gold investment. You must know what you would want to achieve through investing in gold. This plan should be more detailed than just making money.  Once you define you objectives, it is easier to put plans in place on how to go about reaching your goals.

Gold investment will even be easier if you have investment experience as you must be familiar with idea of putting a plan together and develop investment strategy.  This does not mean they you cannot make good decision about investing in gold if you are beginner in investments. All that you need is some bit of guidance. You can find good experts in gold business to guide you through the process.

Gold buying strategies

After making a firm decision and preparing an investment strategy, the other step for gold investment is to invest your money to start buying gold or make other gold investments related to gold.  Make sure that your investments fit to your strategy. You have several options of buying gold stocks, bullions, certificates or futures. You should therefore spend enough time so as determine where and how you should invest your money.

If you are investing in gold for first time, the easiest way to start is to buy gold bars and gold coins. If you have reasonable amount of money   but not that huge for gold investment, gold bars are the better buy.  Gold bars are heavier than the coins therefore will fetch better price   if you finally decide to sell them. The heavy gold bars are also harder.  After investing in gold coins and bars, you can move progressively to make other investments.