5 Different Ways To Buy And Invest In Gold – 2024 Guide

Gold has been one of the most preferred forms of currency since ancient times. In the last five years, investment in gold has spiked high. Investing in this metal is much different from investing in stocks. The top investment advisors advise diversifying the portfolio allocation in various commodities such as gold to lower the overall portfolio risk. Thus, investors are buying gold as one of the hedges against inflation and political chaos.

You can invest in this metal in several ways, including mutual funds, bullion, mining companies, jewelry, etc. Exceptions applied; there are only a few specialty funds that provide direct opportunities to invest in gold. For the latest information, visit Let us go over a few different ways in which people can invest in gold.

#1: Buy Gold Coins


Sovereign governments from all over the world issue a massive amount of gold coins. Investors usually purchase coins directly from dealers. Then they sell these coins at a premium of around 1-5%, which is more than the metal’s underlying value. However, the percentage surged to 10% in 2019.

There are several advantages to buying Coins that include the following:

  • Coins are believed to mint in smaller sizes, most probably of the size of an ounce or even less. Hence, it makes them one of the most convenient ways of investing in this metal than the large gold bars.
  • The latest price of these coins is available easily in global financial publications.
  • Investors can easily find reputable dealers all over the world.

Caution: Investors should not run behind the rare coins. They will have to pay for prices over and beyond their original underlying price. When looking to invest only in this particular metal, you should consider all the coins circulated worldwide and leave the ones that are rarely available for collectors.

Another major problem of investing in these coins is that the insurance costs and storage and the dealer’s vast markups hinder profit potentials. These coins are considered direct investments, and the change in the metal’s price will affect the value of one’s holding. As far as other gold investments are concerned, like mutual funds, people can invest in them in small amounts. Hence, these investments will not have direct exposure to prices as the gold coins have.

#2: Buy Gold Bullions


People who think of bullion as large gold bars are of the wrong notion. In reality, bullion represents any form of pure gold, which is certified for purity and weight. It can include anything like bars, coins, etc., of all sizes. These bars also have serial numbers attached to depict security.

Heavy bars are an inspiring sight. However, their large size is another reason they are not easily bought and sold. Larger sizes are associated with huge costs, and so they become illiquid. For instance, say, you own a single bar that costs somewhat around $100,000 as your complete holding. If you want to sell 10% of your investment, you can not just cut off the end of your bar and market it away. On the contrary, bullions of smaller sizes are liquid and hence, preferred by gold owners.

#3: Invest In Jewelry


Do you know that almost 49% of this precious metal’s total production is used to make jewelry? As the global population and wealth rise, the demand for this metal for jewelry making increases. On the contrary, buyers of jewelry are somewhat sensitive to the changes in its price. That said, buyers buy less of this metal when there is a rise in its price.

When buyers buy jewelry at retail prices, a substantial amount of markup is involved. It can contribute to about 400% more than the actual cost of this metal. Buyers will experience better bargains to buy and sell jewelry at auctions and estate sales. One of the advantages of buying jewelry is that it will not have retail markup.

However, there is a drawback associated in terms of the time spent to look for valuable prices. Although the ownership of jewelry is not a profitable means from the standpoint of investment, gold ownership is a satisfying method of owning this metal. The jewelry pieces are beautiful and can be easily worn on occasions.

#4: Buy Shares Of Mining Companies


Companies indulged in refining and mining this metal are also believed to gain considerably from the rise of this metal’s prices. People who want to make profits from this metal can choose to invest in such companies. It also carries lower risks as compared to the other investment methods.

Larger mining companies boast extensive global operations. Hence, business factors common for several large companies play a significant role in such investment success. Such companies are believed to show profits even when the price of gold lies flat or is declining. These mining companies are a safer way of making investments in gold than owning bullion directly.

However, investors should do their part by researching everything about such companies before they invest.

#5 Invest In Mutual Funds


Another way to purchase gold directly is by investing in gold-based funds. Every share of such instruments represents a fixed amount of gold, such as one-tenth of an ounce. Trading such stocks is quite similar to trading using an IRA account. This method is hence highly effective compared to the buying and selling of bars and coins directly. This method is beneficial for small investors since the price is minimal for a single share. However, investors should know that there are a few companies that concentrate solely on gold investments.

Final Word

Large investors looking to have direct exposure to the price of this metal may prefer investing in bullions. However, they find a comfort level by owning physical assets, which is not equal to holding a paper piece. The only downside is paying a small premium over the gold value people need to pay when buying it. This premium amount also involves storage costs.

Show More

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

  −  5  =  2

Back to top button