Back to the list

Different Types of Gold Investments

17 February 2023 15:13, UTC

Gold is highly valued as an investment due to factors such as high liquidity and inflation-beating capacity. Gold has been the world's favorite wealth from ancient cultures to modern times. One can invest in gold in many forms, including acquiring gold jewelry, coins, bars, exchange-traded funds, funds, national gold bond schemes, and more.

How to Invest in Physical Gold

Safety, liquidity, and profitable returns are the three main factors that conventional investors consider. One can expect to achieve all of these when investing in gold. Although some investors see gold returns as highly unpredictable, gold is a safe commodity for many investors in times of uncertainty.

Returns on investments in gold have been proven to be in line with inflation, regardless of the rate. In a nutshell, it is an inflation-beating investment. Liquidity is another important feature that drives the acquisition of gold; it offers investors excellent liquidity. So how to invest in gold?

Gold Bullion

The most popular way to directly own gold is to buy gold as investment. Gold bullion refers to any kind of pure or almost pure gold that has been verified for its purity and weight. This applies to gold bars, coins, and other gold-containing objects of any size. For security reasons, gold bars are often stamped with a serial number.

Although they can weigh up to 400 troy ounces, big gold bars are costly to purchase and sell because of their large size. After all, if the entire gold asset is one enormous gold bar worth $100,000, and the owner decides to sell 10%, they can't just cut off the bar's end and sell it. So, on the other hand, gold owners invest in gold bullion in smaller-sized bars and coins, which offer much more liquidity.

Gold Coins

Over the years, sovereign governments all over the world have produced gold coins. As a result, investors often purchase coins from private dealers at a premium of 1% to 5% above the value of the underlying metal.

Investing in gold coins has the following benefits:

  • Global financial publications disclose their prices.
  • Because gold coins are often struck in smaller weights (one ounce or less), they are a more handy option to invest in gold than larger bars.
  • Reputable dealers are easy to find in all cities to buy gold coins.

Antique, rare gold coins have historical or "collector's" value in addition to the underlying gold value. To invest solely in gold, one should choose coins that are widely circulated and leave rare coins to collectors. The South African Krugerrand, the US Eagle, and the Canadian Maple Leaf are all popular gold coins for sale.

The main concerns with gold bullion are that it has a relatively high dealer markup and high storage and insurance fees. These two factors reduce profit potential. Additionally, investing in gold coins directly means that the asset's value will fluctuate proportionately when the price of gold changes. Compared to bullion, the other best way to invest in gold is through mutual funds. It requires lesser dollar amounts and protects from direct price exposure.

Buying Gold Funds

Investors are interested in a more cost-effective and accessible entry into the gold market. This is why they choose mutual and exchange-traded funds as the best way to invest in gold. SPDR Gold Shares (GLD), for instance, is one of the first ETFs. Similar to stocks, shares can be bought or sold anytime during the New York Stock Exchange trading day. Each ETF share is worth one-tenth of an ounce.

For instance, if gold is close to $1,300 per ounce, the gold ETF will trade for about $130 per share. GLDs only invest in gold, offering investors direct access to the metal's price fluctuations. Other funds make investments in both gold bullion and the stock of publicly traded corporations involved in the mining, refining, or manufacture of the gold.

Gold stocks tend to experience more ups and downs than the price of gold itself. As a result, investing in an ETF that holds gold-related stocks carries a higher level of risk, but it also has the potential for capital growth, unlike investing in gold coins.

The Bottom Line

Investors who want direct price exposure to gold can buy gold as an investment. Additionally, having a tangible asset rather than just a piece of paper brings a certain feeling of security. In addition, gold-tracking mutual funds and exchange-traded funds (ETFs) provide low-cost exposure with minimal investment conditions. However, before purchasing these shares, one should research because funds differ in their trading strategies and fee ratios. If investors want to buy gold coins at the most competitive pricing, BOLD Precious Metals has a vast range of gold coins for sale at the lowest prices online.