Precious metals indeed are worthy of their title. Since the start of time, they have been a measure of wealth. And up till now, only wealthy investors own these precious gold metals.
Gold has remained on the top of the list of precious metals. And, it is due to its scarcity and beauty. These properties have earned it a place as a commodity of high demand; more attractive to investors.
Several investors are recently becoming interested in gold investments. The reason is gold assets are not influenced by inflation and dollar devaluation. Hence, investors can use them to maintain the value of their investments during a financial crisis. In addition, gold assets do not correlate with paper assets like stocks and bonds and are a means to diversify your portfolio.
Though the asset is expensive to purchase, (especially the physical metal) there are other ways you can invest in it. Some of them include buying coins, jewelry, stocks, and more. You can search online for top gold coins to buy for your portfolio. However, it is best to research to avoid scams.
Features of Gold Investments
Before investing in this metal, it is best to learn about its features. So below are a few features of gold investments:
- New gold coins are usually 99% pure.
- You do not make profits investing in physical gold, except you own mutual funds or stocks that pay you dividends. However, you can make money buying /selling the metal as the value increases.
- Purchasing the stocks of this metal does not mean you own the metal.
- Storing your physical gold might cost you some money.
- There is a limited supply of this metal. And, this is responsible for driving prices high. However, this, in turn, causes an increase in mining activities.
- The value of the metal does not depend on its demand or supply. And, it is because the metals are mainly not utilized for commercial purposes.
- The high volatility in its prices is due to the trading activities of government institutions and banks.
There are other features of gold assets that might interest you. You can click on https://simplicable.com/ to read more about the characteristics of gold.
Gold Investment Options
Coins
Several countries, including the US, are currently minting uncirculated coins. While coins are legal tenders, their meltdown values are more than their face values. In fact, some coins have higher market values due to their demand and scarcity. These coins are called numismatic or collectible coins.
Buying a newly minted coin is easy. There are several popular options you can choose from, like the British Sovereign and American Eagle. However, it is best to research and ensure that its purity is backed by the mint that produces it before buying one.
In addition, coins are affordable to almost everyone as they come in various sizes. For instance, some coins weigh from one-tenth of an ounce to an ounce.
Here is a little history. In about 1933, the then president of the US, Franklin Roosevelt, ordered the calling in of gold in possession of Americans that hoarded them during the Global Depression. However, only a few recognized numismatic coins were exemptions from this order.
Since then, some Americans only preferred old coins due to fear of another confiscation order by the government. Also, they assume that such order may not affect collectibles as before.
There are several numismatic coins minted in the US. An example is the Double Eagle coin. However, other countries have attractive collectibles. These countries include South Africa, Mexico, Great Britain, Spain, and China.
Bars or Bullion
Bullion is a general term referring to the fineness and stamped weight of precious metals. Also, they can come in different shapes and sizes, like coins and bars. In addition, their prices usually include refining costs, shipping, dealer’s premium, and the value of the precious metal.
Bars are in different weights, and you can purchase as small as a gram. However, heavy bars will require storage in a secure facility such as a depository. You can click here to know more about depository facilities.
In addition, purchasing large bars can save you some money as some dealers usually offer discounts for such large purchases. However, such bars are difficult to sell. Also, they can attract the attention of thieves.
Several private firms and government mints produce gold bars. You can find a list of approved government gold bar mints online.
ETFs and Stocks
ETF is short for Exchange Traded Fund. They are an alternative for investing in physical bullion.
There are several advantages of investing in ETFs and stocks. Generally, these assets are paper assets; so you do not own them physically, meaning thatyou do not need a storage facility. Furthermore, investing in ETFs or stocks takes away the risk of exposure to thieves unlike buying bullion. Also, you earn dividends on your investments in stocks or ETFs.
Besides mining stocks, some other mutual funds invest in mining firms. With this you can diversify into other metals like silver, platinum, and palladium. Also, you can purchase futures contracts that allow you to set your future buying price.
While ETFs purchase and store bullion with pool funds, stocks are generally performances of the mining companies. Hence, they are not affected by bullion prices. However, the performance of the individual companies determines that of the stocks.
Jewelry
Here is another way to buy precious metals. Buying jewelry allows you to enjoy the benefits of having a gold asset and wearing it.
The jewelry can be a fine combination of gold, gems, and other precious metals. In most cases, they are passed down generations and this adds some sentimental value to the piece that surpasses its original value.
However, some investors do not see jewelry as an investment. This is because it usually has a higher face value than its meltdown value. However, it is best to check the purity and quality of the piece before buying it. In addition, some homeowner insurance covers jewelry which is a benefit in case it is stolen or lost.
Conclusion
Investing in precious metals is profitable and can generate wealth for investors. And there are several ways you can buy them. While some wealthy investors prefer buying physical bullion, other investors can invest in them by purchasing stocks, futures, or ETFs. However, gold investments are risky so it is best you research before investing.
