Investors looking to invest in gold have three main options: buy physical gold, invest in mutual funds or ETFs that track gold prices, or trade futures and options in the commodities market. For example, average investors can buy gold coins, while more advanced investors can use options on gold futures as part of their strategy.
The Buying Gold Bullion
Gold is more available to the average investor than other goods. People can easily buy gold bullion, whether in the form of coins or bars, from bullion dealers. In some cases, it is also available from banks or brokerage firms.
Bullion bars come in a variety of sizes, from a quarter-ounce wafer to a 400-ounce brick, but new investors often prefer coins. Unlike older historical coins, these are new issues that are priced based on their gold content and premium. According to Jamie Whelan, CEO of First Capital Gold, for maximum liquidity, most buyers choose widely circulated gold coins such as the South African Krugerrand, American Eagle, and Canadian Maple Leaf.
Regardless of your preference, make sure you buy from a reputable dealer, whether in person or online. Gold coins need to be stored safely, either in a safe at home or in a safe deposit box at a bank, and they need to be insured.
Gold jewelry gives investors the added pleasure of wearing their investment. Often, gold is combined with other precious gems and metals to enhance its value and beauty. Such pieces often become family heirlooms, acquiring sentimental value over time. However, jewelry is generally not the best choice for pure investment purposes, as its retail value is usually much higher than its melt value due to the cost of craftsmanship and retail markup. Always check the purity of the gold before buying to make sure you are not paying too much for a low-karat piece.
Most homeowner insurance plans include coverage for jewelry, protecting it against theft or damage.
The Buying Gold Funds
Owning physical gold presents challenges, as do the logistics of owning barrels of oil or crates of soybeans. These difficulties include transaction fees, storage costs, and insurance costs. For investors looking for more liquid and cost-effective ways to enter the gold market, mutual funds and exchange-traded funds that track the price of gold offer a viable alternative.
SPDR Gold Shares (GLD), launched in 2004, is one of the oldest ETFs of its kind. It trades on the New York Stock Exchange and can be bought or sold throughout the business day, just like a stock. Each share of this ETF represents one-tenth of an ounce of gold. For example, if the price of gold is around $1,300 per ounce, the ETF will trade at around $130 per share. GLD only invests in physical gold bullion, giving investors direct access to gold price movements. In contrast, other funds invest not only in bullion but also in shares of companies involved in gold mining, refining, or production.
Gold reserves change as quickly as the price of gold. Additionally, individual companies face risks that are not directly related to gold prices, such as political issues or environmental concerns. Therefore, investing in an ETF holding gold stocks carries more risk but also offers higher growth potential than investing directly in bullion.
Best Buying Gold Futures Options
Experienced investors who prefer not to risk large amounts of capital can consider gold futures or gold ETF options. These options give the right, but not the obligation, to buy or sell gold at a specified price within a specified period. Options can be exercised regardless of whether you predict the price of gold to rise or fall. If your prediction is wrong, your maximum loss is limited to the premium paid for the option.
In the US, you can buy and sell put and call options on gold futures through the Chicago Mercantile Exchange through a futures broker. Additionally, options on the SPDR Gold Shares ETF are available to investors and may be traded in a standard brokerage account approved for options trading. Some traders also invest in short-term price movements in gold by buying and selling gold futures contracts, which trade on the CME under the symbol GC.
The Buying of Gold Mining Stocks
If you can’t buy physical gold, you can consider investing in gold mining stocks instead. It is important to note that the price of these stocks does not always follow the price of gold itself. That’s because the stock prices of mining companies depend on how well they perform as businesses—how effectively they use their money to make a profit. do If the companies you invest in don’t perform well, you won’t have the security of owning physical gold.
FAQ: Invest in Gold in 2024
Is gold a good investment for 2024?
In 2024, depending on economic conditions, geopolitical stability, inflation rates, and how investors feel about traditional safe-haven assets, investing in gold could be profitable. Throughout history, gold has been a reliable hedge against inflation and economic uncertainty, making it attractive when markets are unpredictable.
Which period of 2024 is the best for purchasing gold?
It is difficult to predict the right time to invest in gold as it depends on many factors and market behavior. Generally, people buy gold when they anticipate economic instability, political unrest, or rising prices. But timing these shifts is difficult. Many investors opt for dollar cost averaging instead, buying gold at regular intervals regardless of how prices move, to reduce the impact of market fluctuations.
Is it too late to invest in 2024?
It is always a good time to consider investing in gold or another asset that suits your investment goals and risk tolerance. When choosing to invest, it is important to evaluate your financial situation, investment horizon, and reasons for choosing gold as part of your portfolio. Despite price volatility, gold can still play a valuable role in diversifying your investments, depending on current market conditions.
How do I buy gold for the future?
There are several ways to buy gold:
Physical gold: purchasing gold coins, bars, or jewelry from reputable dealers or banks.
Gold ETFs (Exchange-Traded Funds): investing in ETFs that track the price of gold.
Gold futures and options: trading agreements that mandate the buyer buy or sell gold at a predetermined price at a later date.
Gold mining stocks: buying shares in businesses that mine and produce gold.
Conclusion
If you want to diversify your investment portfolio with gold, ETFs are your best bet. On the other hand, if you want protection during a global crisis, physical gold is recommended.
