There are several different ways to invest in gold and it is extremely important to understand how it works. Buying shares of gold on speculation is far different than commodity trading, which is also far different from owning actual gold bullion. Investing in gold can be a great option – and potentially the safest one, but you also need to understand how gold can be traded to get a full understanding of what an investor’s real options actually are.
There are multiple ways to invest or trade in gold. Understanding the pros and cons of each one will help make sure you choose the method that actually matches what you’re looking for so there’s no worry of a bait and switch.
Option #1: Direct Gold Ownership
This is what most people consider the best option, and it’s the one that by far and away offers the most security. While gold is seen as being a safe investment option, that is true only if you own the physical gold. Direct gold ownership takes place from owning specific standard format gold coins or gold bullion.
This allows the direct ownership of physical gold, and the value of that is measured by the ounce. Gold will often be kept in a home safe or a bank drop box.
Option #2: Gold-Based Exchange Funds
These are sometimes referred to as EFTs, and allow for individual investors to trade gold like an ordinary up and down stock as these funds only invest in hard bullion. The EFT is the ownership an investor has in it and allows them to buy and sell as they see fit, making it easier to move gold in this form since it can be traded on the markets.
Option #3: Gold Speculation (Options & Futures)
Pure speculation is allowed when it comes to the price of gold but if you’re going to go this route you need to really understand fundamental market reports, how the strength of certain currencies correlates to the price of gold, and have a high risk tolerance, especially if you are speculating with leverage involved.
Option #4: Speculative Junior Gold Stocks
These stocks are on companies that often search past claims or are involved in gold investments that aren’t associated with active gold mines. This means there is definitely higher risk here, but there’s also higher upside and reward. This isn’t for everyone, but it’s another offering that does get people involved in the gold market.
When it comes to investing in options there are several options available, but that doesn’t mean they’re all the same or equally good. Do your research to make sure you’re getting the type of gold investing that meets your needs, goals, and your level of risk tolerance. Different forms of gold investing will be radically different in how the gold is handled, what ownership actually means, and how profit is made, but you will have plenty of options for getting into this market.