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Asher Evans
Asher Evans

What Is The Best Way To Buy Gold For Investment

The most common gold coins weigh one or two ounces, though half-ounce and quarter-ounce coins are also available. Collectible coins, such as South African Krugerrands, Canadian Maple Leafs and American Gold Eagles, are the most widely available type of gold coins. Some dealers even sell blanks and damaged or worn coins.

what is the best way to buy gold for investment

Investing in the stock of companies that mine, refine and trade gold is a much more straightforward proposition than buying physical gold. Since this means buying the stocks of gold mining companies, you can invest using your brokerage account.

The SPDR Gold Shares ETF (GLD), for example, holds physical gold and deposit receipts, and its price tracks the price of physical bullion. VanEck Vectors Gold Miners ETF (GDX), on the other hand, is a passively managed fund that tracks an underlying basket of stocks of gold mining and refining companies.

Of all the ways to invest in gold, the riskiest is trading futures or options contracts, a form of speculative investing. Futures and options are derivatives, meaning their value is based entirely on the price of an underlying asset.

People who choose to invest in gold via options or futures contracts need to actively monitor their holdings so they can sell, roll over or exercise their options before they expire worthless. In addition, each of these options includes a certain degree of leverage, or debt, by default, so investors who overuse them and experience market losses can see their losses mount quickly.

Depending on your own preference and aptitude for risk, you may choose to invest in physical gold, gold stocks, gold ETFs and mutual funds or speculative futures and options contracts. Regardless of the form of gold you choose, most advisors recommend you allocate no more than 10% of your portfolio to it.

Dock David Treece is a former licensed investment advisor and member of the FINRA Small Firm Advisory Board. His focus is on breaking down complex financial topics so readers can make informed decisions. He has been featured by CNBC, Fox Business, Bloomberg, and MarketWatch.

Mutual funds and ETFs are generally the easiest and safest ways to invest in gold. Each share of these securities represents a fixed amount of gold, and you can easily buy or sell these funds in your brokerage account or retirement account. Gold mutual funds and ETFs are a good choice for beginning investors because of their low cost and low minimum investment requirements.

Because gold historically has shown a low correlation with other types of investment assets, many investors include gold in their portfolios as a buffer against potential economic downturns. Gold prices generally increase when bond yields decline. While there may be benefits to investing in gold in a recessionary environment, its effectiveness during a recession or any other stage of the economic cycle will depend on how it fits into your overall investment strategy.

The investment information provided in this table is for informational and general educational purposes only and should not be construed as investment or financial advice. Bankrate does not offer advisory or brokerage services, nor does it provide individualized recommendations or personalized investment advice. Investment decisions should be based on an evaluation of your own personal financial situation, needs, risk tolerance and investment objectives. Investing involves risk including the potential loss of principal.

Gold futures are a good way to speculate on the price of gold rising (or falling), and you could even take physical delivery of gold, if you wanted, though physical delivery is not what motivates speculators.

The biggest advantage of using futures to invest in gold is the immense amount of leverage that you can use. In other words, you can own a lot of gold futures for a relatively small sum of money. If gold futures move in the direction you think, you can make a lot of money very quickly.

Risks: ETFs give you exposure to the price of gold, so if it rises or falls, the fund should perform similarly, again minus the cost of the fund itself. Like stocks, gold can be volatile sometimes, but these ETFs allow you to avoid the biggest risks of owning the physical commodity: protecting your gold and obtaining full value for your holdings.

"History has shown that during economic slowdowns, from the Great Depression to the COVID-19 pandemic, gold appreciates in value," says financial analyst James Jason of Mitrade, a commodities trading platform.

Bullion often refers to gold in bulk form, usually bars or ingots. Typically, gold bars are poured and ingots are pressed (a cheaper production method). As a result, bars command a higher premium, or added cost, over the daily spot price of gold than ingots.

Ranging in size from quarter-oz. wafer to a 430-oz. brick, bars, and ingots are stamped with purity, origin, weight, and where the bullion was minted. Not all gold is equal, especially when it comes to purity and weight. Investment-grade gold is at least 99.5% pure.

Buying shares of companies in the mining, refining, or other aspects of the gold production business is one way to play. About 300 of these companies, aka "miners," are listed on major stock exchanges. Their share prices generally reflect the movement of the metal itself. However, "the growth and return in the stock depend on the expected future earnings of the company, not just on the value of gold," notes the World Gold Council, an industry trade group.

More conservative investors can buy shares in gold-oriented mutual funds or exchange-traded funds (ETFs). These funds have varying investment approaches: gold-backed ETFs tend to invest directly in physical gold, while mutual funds favor gold mining stocks. Some funds invest in both. But all offer a liquid, low-cost entry into the gold market that is more diversified, and so lower-risk, than buying equities outright.

In the U.S. the COMEX is the primary exchange for gold futures, and therefore, the place where the most-widely quoted gold prices are set. The London Bullion Market Association also provides a twice-daily \"fix\" price used as a benchmark for large market participants.

In general, look for what's known as the \"gold spot price,\" that's the price at which buyers and sellers are willing to trade gold today, as opposed to some future date (specified in a certain month's futures contract.)

Gold is considered a way to hedge against inflation and can be used to diversify your portfolio. It's also a highly liquid asset, so you'll be able to find a buyer for your gold when you need to sell.

You can buy physical gold from retailers like JM Bullion and APMEX, as well as pawn and jewelry shops. (Do note that buying it from jewelry stores and pawn shops could be riskier as it could end up being lower karat gold.)

Profits from trading securities like stocks and bonds are known as capital gains and are taxed at special long-term and short-term capital gains rates. But the IRS looks at profits you earn from trading gold and other \"collectibles\" differently.

Money is not a client of any investment adviser featured on this page. The information provided on this page is for educational purposes only and is not intended as investment advice. Money does not offer advisory services.

For instance, the most common type of gold used in jewelry in the U.S. is 14K gold, produced from 58.3% pure gold and 41.7% of other metals like copper and silver. Other common mixtures of gold are 18K, and 22K.

Aside from buying physical gold, you can invest in a variety of gold-backed securities through investment companies, brokerage accounts or gold IRAs. These include gold ETFs, gold mutual funds, mining stocks and futures contracts.

Investors buy shares in the fund through a brokerage, whether in-person or online. ETFs charge fees, but they tend to be lower than fees charged by gold mutual funds. They may also be lower than what it costs to insure and store gold in a facility like a safety deposit box. On average, ETFs charge annual fees of 0.59% of assets invested ($59 per $10,000 invested), according to

The contracts (whose value can also be settled for cash) can be traded among speculators who hope to make money by betting that gold will increase (or decrease) in value before the settlement date. Futures contracts are usually for 100 troy ounces of gold, while their prices are quoted in U.S. dollars per ounce.

To buy gold futures contracts, you need a brokerage account with a full-service broker that support futures trading, such as Charles Shwab, E*Trade or TD Ameritrade. You may also open an account directly with CME Group, the derivatives marketplace that manages NYMEX.

A gold IRA is similar to a traditional IRA in that it lets you invest in tax-preferred securities, but instead of holding stocks, bonds or mutual funds, you hold physical gold bullion, coins or bars. Despite its name, gold IRAs also give access to other precious metals, like silver, platinum and palladium.

Top gold IRA companies are typically transparent about their fees and offer unbiased educational resources and responsive customer support. They also feature intuitive account setup and options to rollover different retirement accounts.

Because gold is volatile in the short term, and can lag behind stocks in terms of long-term price appreciation, financial advisors typically recommend investing no more than 10% of your savings in gold.

More and more investors are worried about the social and environmental impact of their investments. Gold mining can take a significant toll on the environment and mining practices have raised concerns around human rights, as many gold mines are located in conflict-affected areas.

In the U.S. the COMEX is the primary exchange for gold futures, and therefore, the place where the most-widely quoted gold prices are set. The London Bullion Market Association also provides a twice-daily "fix" price used as a benchmark for large market participants.

In general, look for what's known as the "gold spot price," that's the price at which buyers and sellers are willing to trade gold today, as opposed to some future date (specified in a certain month's futures contract.) 041b061a72


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