Gold ETF Advantages & Disadvantages

Investing in Gold Basics

Published: December 3, 2021

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There are many ways you can invest in gold. It really depends on your preference.

I have a lot of friends who prefer buying gold jewelry. I know some people who like buying works of art made of gold. If that is your preference, there is absolutely nothing wrong with that.

You can also Invest in Gold by Purchasing Stock in Gold Miners. For as long as you have a brokerage account, you can buy a share in mining companies.

Just know that aside from gold’s spot price, stocks are also influenced by the company’s current profitability and expenses. If the company goes down, your share disappears.

You can also invest in Gold ETFs and Gold Mutual Funds

Investing in gold ETFs and mutual funds can provide you with exposure to gold’s long-term stability while offering liquidity but you aren’t buying gold, just paper that is theoretically backed by debt or equity of mining companies or futures and options contracts for physical bullion.

This means the value of gold mutual funds and ETFs may not entirely match up with the market price of gold, and these investments may not perform the same as physical gold.

Next, you can Use Futures and Options to Invest in Gold

Futures and options are derivatives, meaning their value is based entirely on the price of an underlying asset.

A futures contract allows you to buy or sell a security for a set price on a certain date, regardless of the current market conditions.

An options contract, on the other hand, is an agreement that gives you the option to buy or sell a security if it reaches a certain price on or before a certain date.

In order to invest in futures or options, you need an account at an online broker that offers these vehicles.

It is very risky because it is highly speculative. If you are into stocks, then you know that stocks are speculative. Multiply that ten times, and you might come close to Futures and Options.

The best way to invest in gold if you want a hedge or a store of value is to own gold. You can do it in two ways, open a GoldIRA or physically keep the gold with you.

A Gold IRA is a common term people use when investing in gold through their Individual Retirement Account or IRA. If you open a self-directed IRA or SDIRA, you can put different types of assets in there and one of them is gold.

If you open a Traditional SDIRA, taxes are deferred until you cash it out. If you open a Roth SDIRA, you pay taxes now and pay nothing when you cash it out even on your capital gains.

You can also get gold delivered to you. Some people like the thought of seeing and being able to touch their investment.

You can buy Gold coins or gold bars.

I know some of you will ask why can’t you just go to a flea market and buy gold coins.

Not all gold coins or gold bars qualify as IRA allowable precious metals. Gold must be 99.5% pure, silver must be 99.9% pure, and platinum and palladium must both be 99.95% pure.

Bars, rounds, and coins must be produced by certified refiners, assayers, or manufacturer that is accredited/certified by NYMEX, COMEX, and a few others, or national government mint and meet minimum fineness requirements.

Investing in gold through an IRA or through physically possessing it is the best way to invest in crypto.

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Investing in Gold Basics

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