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.