How to Invest in Gold Wisely

Gold has been used as a form of currency for over 2700 years.  This is for a variety of reasons, including the fact that is rather shiny and aesthetically pleasing, is a relatively soft metal and therefore easy to smelt into various shapes, and contains no impurities meaning that every ounce of gold is standard and identical to every other ounce of gold in the world.  Civilizations all over the globe have used gold to back up and support their monetary systems, including the United States up until the 1930s.  Its ability to be a uniquely stable store of value continues to this day.  That is why many turn to gold when they are considering getting involved in precious metals investing.

While gold, like any other assets, can be subject to short term spikes in value, it still remains one of the best long term investments that an investor looking to diversify their portfolio can make.  One of the reasons why this is true is because gold is a very effective hedge against times of inflation, deflation, periods of poor economic performance and even times of social unrest.  Another reason why gold is such a strong investment is because the demand for it is constantly driven by the demand for its use in jewelry production.  Owning gold jewelry is seen as an important and easily visible marker of social status, meaning that people want it to demonstrate their wealth.

One of the advantages that gold has when compared to soft, paper assets such as stocks and bonds is that it can be physically possessed by the investor who owns it.  While one may struggle to find places where gold currency is directly used in trade, it can simply be exchanged for cash almost everywhere around the globe.  If one is not comfortable physically owning and storing gold as an asset, then there a few other ways that one can invest in the gold marketplace.  One way that an interested investor can get involved is by investing in a gold exchange traded fund, or ETF.  ETFs market value is tied to the spot price of gold, although one does not actually have to own any physical gold to be invested in gold ETF.  One variation of this is called the geared gold ETF.  This is quite simply a bet on whether or not the spot price of gold will increase or decrease.

Another way that potential investors can invest in gold without actually buying the physical stuff is by buying gold stocks or gold futures.  Investors around the world have the opportunity to buy stocks in gold production, mining and exploration companies.  A final way that one can get involved in the gold marketplace without owning any physical gold is by buying shares in Australia’s Perth Mint.  The Perth Mint is backed by the Australian government and is essentially equivalent to owning the same physical amount of gold that one purchases.

If one is interested in physically owning gold as an investment, there are a few different ways that one can do so.  One way that one can buy gold is through the purchase of 1 ounce bullion gold coins.  The American Buffalo and Gold Eagle, the Australian Kangaroo, the Austrian Philharmonic, the Canadian Maple Leaf and the South African Krugerrand are all examples of type of bullion coins made available for purchase by their respective governments.  While they all are valued at slightly different prices, they are generally in the same ballpark range.  One can also choose to purchase gold in the form of bars.  These bars can be bought in one ounce, 10 ounce, 1 kilo, 100 ounces and 400 ounce forms.  The 400 ounce bars are the size of bars that one typically sees in movies.