Gold is always considered a good investment vehicle, especially against high inflation rates and economic problems. What makes this precious metal a good investment is its relative price stability and the almost constant growth rate over time. The allocation of part of your portfolio to gold guarantees the diversity of your portfolio and protects against the risk of the portfolio derived from price volatility.
There are many different opportunities available directly and indirectly to invest in gold. Each method has its pros and cons, and there are many factors that must be considered before they are adopted, including the size of your portfolio, risk tolerance, risk capital, investment experience, and management strategies. Some popular ways to invest in gold are mentioned below.
1. Purchase gold bullion.
Invest in certified and standardized gold and bullion coins. The idea is simple: you get the yellow metal that is worth the amount paid and you should get a profit if you sell it after a while. You will own the precious metal directly.
This is a very good way to invest in gold, only if you are interested in these works of art. From the point of view of an investor seeking portfolio growth, investing in gold jewellery is a costly option. Jewellery items are often much more expensive than the value of the metal. But investing in jewellery is very popular.
3. Gold Exchange Traded Funds (Gold ETF)
ETFs are becoming very popular commercial instruments. Gold ETFs that keep gold as an underlying is an excellent indirect investment. ETFs are traded on stock exchanges, like stocks, and your portfolio is firm. They are low-cost commercial instruments, which means that you can buy or sell them at any time. Investing in gold ETFs does not require investment knowledge, but you must first look for fund management guidelines to make it clear that it works for you.
4. Gold fund
Another indirect way to invest. Mutual funds buy, hold and sell shares of gold shares, gold mining shares, and commercial companies. Investors can buy units of these mutual funds for future profits. Not much investment knowledge is required, but the investor must choose between several mutual funds that follow different asset management strategies.
5. Futures on gold and gold options.
Gold futures are perhaps the least expensive way to invest in gold. With a small capital investment, you can control large futures contracts effectively using commercial margins. Negotiation futures also involve low commissions. Gold options are also powerful and economical investment instruments that can be used to maintain the desired amount of yellow metal in the future and that can also be used to hedge changes in precious metal/ jewellery/stock prices. But investing and benefiting from futures and options requires good knowledge and business experience.
6. Invest in gold stocks
Investing in gold mining stocks and researching companies is an indirect way to invest. But it requires good commercial knowledge and stock selection skills.
7. Gold accumulation plans.
These are accounts that have been set up to invest a fixed amount each month to buy the precious metal. When accounts are closed, investors can own gold as cash or currency. The advantage is that by assigning a fixed amount of money for each month, you can reduce the price of more metals and lower the price. But this is a long-term process (at least one year) and you must have a stable monthly income to feed those accounts.