Investors tend to shy away from precious commodities because of the seeming volatility of gold and silver prices. However, many are still optimistic about gold—at least one world leader has been stocking up on the metal because he’s aware of its true value.
It’s no secret that gold can be an effective hedge against inflation, and some experts believe that knowledge about the precious metal will change the minds of those who are dubious towards its potential. With this premise, here are the different gold investment methods:
- Buying physical gold – this can be the most direct exposure that an investor can get. However, be wary of transaction fees in the purchase which may also include hidden costs.
- Gold Futures – this refers to a deal to trade gold at a settlement date in the future, as stated by Bullion Vault, the world’s largest online market for buying physical bullion according to The Telegraph. This means that the buyer need not pay the full amount up front, and the seller has no obligation to deliver the gold yet. Futures traders may speculate on the rise or fall of gold prices before settlement date.
- Gold Exchange-Traded Funds (ETFs) – this is a type of mutual fund which can be traded like ordinary stocks, with gold as the underlying commodity. This is an exact portfolio and is therefore unchangeable, according to research website Daily Reckoning. It’s also known to be an easy and cost-effective measure.
- Gold Options – this is an alternative to gold futures, said Investopedia in an article. The owner is given the right to purchase the futures contract within a timeframe at an agreed upon price. It has the following advantages: it acts as leverage to the original investment, and it limits the losses to the paid price.
Having any of these investments could provide diversification to an investor’s portfolio. Consultation with financial experts is encouraged before deciding on an investment option.