When thinking about investing in gold, don't just buy physical gold, such as coins or ingots. Alternatives to investing in gold include buying shares in gold mining companies or gold exchange-traded funds (ETFs). You can also invest in gold by trading options and futures contracts. Exchange-traded gold commodity funds are an easy way to expose yourself to gold without the need to buy real gold.
There are many types of gold ETFs. Some of them consist of futures and derivative contracts that track the price of gold and gold-related indices, while others consist of gold assets held in a trust. There are even gold ETFs that track companies in the gold industry, such as mining companies. Investing in gold mining companies is an interesting way to combine gold investments with traditional stocks.
By buying shares in a company that works with gold, investors can access the profits of gold without buying or selling it themselves. This form of investment can also reduce risks, as there are other business factors at play that can help protect investors from stable or falling gold prices. That said, investors do important research when looking for the right company to invest in. There are risks associated with the mining industry that may interfere with overall profits or even pose ethical problems.
Always do your research when selecting a gold mining company to invest in. If you don't like investing in gold futures, you can try gold ETFs. Instead of owning a futures contract and paying attention to the maintenance margin, you can buy ETF stocks and expose yourself to gold. The SPDR Gold Trust (GLD) ETF is popularly used; the Trust's investment objective is for its shares to reflect the return on the price of gold bars.
This is one of the best ways to invest in gold, as ETFs and mutual funds allow investors to work with gold without having to face the costs of physical property (such as securities or gold insurance). If you're ready to explore gold and precious metals ETFs for your investment strategy, it's important to thoroughly research your target investments. You can also try Lear Capital, which is a comprehensive precious metals broker that allows you to buy physical gold bars or coins, buy in gold IRA accounts and combine these investments into your overall financial portfolio. Maturity is also a standardized feature of the gold futures contract and investors can choose their time horizon taking into account the standard maturity.
To buy gold bars, you have to pay a premium on the price of gold, which can range from 3% to 10%. In addition, gold bars can be a difficult asset to buy and sell, since you must identify buyers willing to buy at any bar of the size in which you have the asset. What many people don't know is that gold is actually very liquid; that is, it can be bought and sold relatively quickly due to high demand. In exchange, those who deposit gold will receive a paper receipt that could be redeemed for their gold sometime in the future.
Investors are often attracted to gold as a way to diversify and as a way to safeguard their current portfolios. For example, if you wanted to invest in the gold mining sector, you would have to choose companies in this sector to invest in and then buy individual shares in each company. Fears of inflation and recession led gold to its highs in 1980, while several events caused gold to trade higher after 1999.