Gold, as so many of us are so often told, is the most stable investment you can invest your money in during these strange economic times. Unlike many other types of investment, gold prices don’t jump up or drop sharply based on political or social events or almost anything that happens in the news.
That isn’t true one hundred percent of the time - gold can and sometimes has dropped sharply in value without warning - but history tells us that it’s true more times than it isn’t.
For cautious traders, gold is often a more sensible investment than something that will go up and down drastically and cause you unnecessary anxiety or stress.
However, investing in gold isn't as simple as acquiring a few bars of bullion. You can do that if you wish, but it isn't always the best way!
There are several ways to become a gold investor, and not all of them involve physically owning any gold. We can't tell you which is the best for you - that's a job for your financial adviser.
We always recommend speaking to a professional before you decide where to put your money. However, we can make you aware of the most commonly selected options. If you invest in gold, you'll most likely want to do it one of these five ways.
Jewellery
Buying gold jewelry is the most common form of gold investment. Typically, jewellery investments can be volatile, but gold jewelry holds and increases its price better than jewelry made from any other material.
Don't take this as a sign to head to your local store or flea market and buy up all the gold jewelry you can find, though - not all gold jewelry is equal.
24K gold is pure gold and will cost you much money. 10K gold is at the other end of the scale. Gold accounts for less than half of the composition of 10K gold items. Don't buy anything at less than 14K because it's unlikely to become valuable. Always get a certificate of authenticity from wherever you buy it from too. It prevents arguments or debates about provenance from occurring later.
Gold ETFs
If you're a novice investor, your first question is probably, "what is an ETF?" The answer to that question is that it's an exchange-traded fund. From the name alone, you should understand that buying into gold ETFs means buying your way into the stock market - and so you should also know the risks.
For all the glitz and glamour that sometimes accompanies it, the stock market is just a planet-wide game of online slots which offer free spins no deposit.
A little knowledge about how it operates can help you to tilt the odds in your favor in just the same way that knowing the 'return to player' rate and the volatility of a game at an online slots website can improve your chances there, but there's still a lot of luck involved. We know that stock traders might not appreciate being compared to online slot players, but it's a fair comparison.
Nevertheless, the route is available if you want to take it, with more than 30 ETFs specializing in gold and an increasing number of people pair gold ETF investments with property investments as a preference to currency holdings. Ask your adviser to go through the pros and cons with you.
Gold Single Stocks
This might be the most simple way you could invest in gold. When you invest in single stocks related to gold, you're literally investing in a company that mines the precious material out of the ground.
You might think this is a no-brainer because anyone operating a goldmine must surely be making money, but some gold mines perform better than others.
Some are about to go dry. Others are at the beginning of digging out a whole new seam of gold. You need to know who you're investing in before you part with your cash, which means knowing what inventory they have, what their reserves look like, and what their track record is.
Single stocks can be very profitable if you back the right horses but disastrous if you back the wrong ones. Knowledge is power, so do plenty of reading before you head down this route.
Closed-end Gold Funds
The attraction of closed-end funds is that they usually come with a discount that makes them cheaper than buying directly into the asset they're traded in.
The downside is that they also usually come with fees. Only their performance will dictate whether the fees justify the discount or vice versa, and even past performance can't always tell you whether future performance is likely to be favorable.
The key to success in this market is finding a fund with a deep discount and jumping on it just before a sharp rise in the price of gold.
Unfortunately, if it was easy to do that as it was to write about it, everybody would be rich, and we wouldn't be writing this article because we'd be enjoying our private villa in the Bahamas.
A very experienced, shrewd adviser might be able to spot the patterns that indicate when the right times for jumping on or off might be but ask them for evidence of the performance of their investments before you follow suit. They should be confident to put their own money where their mouths are.
Gold Coins
Anyone who said that collecting coins is a boring hobby clearly doesn't understand the value of money. Gold has been used to make coins for as long as coins have existed and will continue to be used for the same purpose until physical currency no longer exists.
American Eagles are the most popular type of gold coins in the USA, although Canadian Maples also have value and are expected to keep it in the years to come.
Be careful where you buy it from, though - professional dealers and brokers are the best way to go if you want to ensure that you steer clear of counterfeits. You wouldn't want to spend big money on coins only to discover they're not quite what you thought they were!
