Five Ways To Invest In Gold
When it comes to investment Gold investment is one of the best investment opportunities that comes our way. Gold investments are profitable in the long run as it is a safe haven when the market is low or going through recession. For example at the time of coronavirus pandemic 2020 people started buying Gold as the market was going through recession and people wanted a safe source where they can park their money.
Investors and savers like gold for so many reasons you can always go for bond of gold or hard gold jewellery as well as stock market for the investment in gold.They look at gold as a hub of value, even though it’s an asset that doesn’t generate cash flow.
If you are buying specific kinds of gold based assets then you can readily convert them to cash.Gold performance often varies from stocks & bonds, i.e. when the price increases of stock, gold’s price may decrease or vice versa. Just because gold is not highly correlated to other assets, which means it can help diversify portfolios, by actually making them less risky.
5 ways to buy and sell gold
- Gold-bullion: One of the most emotionally satisfying ways to own gold is to purchase it in the form of bars or coins. You can feel highly satisfied by looking and touching the gold but having this type of gold more than a little has its serious drawbacks of safety and insurance and now as per government norms proper guidelines are being given about the possession of gold in the form of bullions or bars.To make a high profit, owners of physical-gold are wholly dependent on the gold’s price-rising, in contrast to the owners of business, where when the company produces more gold and therefore more profits, driving their investment little higher. You can buy gold-bullion in a number of ways i.e. through any online-dealer such as APMEX or JM Bullion, or might be some local dealer or collector. A pawn-shop may also sell gold. You should note down the gold’s spot price as you’re purchasing, so that you can make a better and fair deal.
- Gold futures: Gold future is a really good way to speculate on the price of gold-rising or falling and you could also take the physical delivery of the gold, if you wanted, though that’s not what actually motivates speculators.One of the biggest advantages of using futures to invest in gold is the large amount of leverage that you can use. Also we can say that you can own a lot of gold futures for a relatively small amount of money. If gold-future moves in the direction you plan, you can make a lot of money very easily.The leverage for the future investors cuts both the ways,however. If gold moves against you, you’ll be forced to put-up large amount of money to balance the contract otherwise the broker will shut the position. So as the futures market gives you opportunities to earn a lot of money, you can lose it very quickly.
- Exchange-traded fund (ETF) – A Gold ETF is an exchange traded fund that has the aim of tracking domestic price of physical gold. They are not direct investment in gold,rather it is the online purchase of gold bullions based on gold ETF are listed on National stock exchange of India (NSE) as well as Bombay Stock Exchange Ltd. (BSE) like any other stock company.The trade of Gold ETFs can be done on the cash segment of NSE and BSE and like all the other companies the stocks can be bought or sold at the market price. Purchase of Gold ETFs means the buying of gold in electronic form. Just as the normal trade of stock you can sell and purchase ETFs.when you redeem the gold ETFs you don’t get physical gold but the money equivalent. You can easily deal in it by using your demat account available by most of the banks now which makes it really convenient
- Mining stocks- Another way to take benefit of rising gold prices is to own the producers of the stuff i.e. the miners.In any way this might be the best option for investors, because they can earn money or profit in more than one way on gold. Firstly if the gold’s price rises, the miner’s profit rises too. Secondly, the miner has the capability to increase production over time, giving a dual whammy-effect. So you get two possibilities to win, and that’s better than relying on the increasing price of gold alone to buy your investment.
- ETFs that own mining stocks- If you don’t want to invest much into individual gold companies, then buying an ETF mining could make a lot of sense. Gold miner ETFs will give you a platform where you can contact or communicate with the biggest gold miners in the market. Since these funds are at a large scale i.e it is diversified across this sector, you won’t be disappointed much from the underperformance of any of the single miner.While the different and diversified ETFs protect you against any of the companies doing poorly, it will not save you from something that affects the whole industry, such as sustained low gold prices. And you should better be careful when you’re opting your fund: not all funds are created same or equal. Some funds have established and well settled miners, while others have junior miners, which might be more risky.
Investing in gold is not for anyone or everyone, and few investors stick with placing their bets on cash flowing businesses rather than have to rely on someone else to pay more money for the shiny metal. That is one reason biggest investors such as Warren Buffett caution against investing in gold and instead of advocating, buying cash flowing businesses. Plus, it’s simple to own stocks or funds, and they are highly liquid in nature, so you can easily exchange your position to cash, if you want to.
Founder & CEO| Fox Investor & A.V.A. Taxway Associates- Corporate & Tax Law Firm
Viibhor Agarwal is a Business & Brand Consultant as well as he is a Financial Expert his area of specialization is to guide Entrepreneur, Start-up’s and SME’s to build the brand value of business financially & legally. He has 8 year extensive experience in this sector