A question we get asked quite a bit from readers is how do I buy gold?
There are four main ways to invest in gold.
1. Buying physical gold bullion.
2. Investing in gold futures contracts.
3. Investing in gold exchange traded funds (ETFs).
4. Investing in gold mining companies.
Any gold coin before 1933 is an excellent investment. The United States Mint website has a handy coin dealer’s database on their website. Buying broken gold jewelry, other gold items and collectibles can be an enjoyable way to collect gold for investment, but one must be aware of scams both on the selling and buying end and must take into consideration the premium values places on jewelry for the craftsmanship and design. Any jewelry over 14 karat gold is a good risk. Scrap gold is one of the safest and most enjoyable way to invest in gold.
Gold bullion is a relatively safe method also, and probably the best for the new investor. This is the method for investors willing to wait long term; as gold will resist inflation even after economies improve.
Commissions for Gold futures, purchased through commodity traders, are negotiable. You are contracting to buy Gold at a higher value than you are actually outlaying in cash, with a belief in the future value. Investors should only invest capital that they can afford to lose. The benefit here lies in using leverage but using leverage also involves risk.
Gold Exchange Traded Funds
ETFs are purchased through the regular stock market avenues, with the same thoughts and processes of buying any stock. Buy low and sell high. We will do another post on gold etfs explaining the advantages of investing this way.
Gold Mining Companies
A very popular method of investing in gold is through gold mining companies. These are gold companies that are producing and/or are exploring for gold. You can buy these shares through the stock market. The Toronto Stock exchange is home to many of these gold mining companies. These companies are very volatile and can have explosive moves to the upside or downside depending on various factors. We will have a more in depth post all about gold mining companies in the near future.