Gold has always held a certain gleam of light. It’s been around since the dawn of time, but why should we invest in gold? In the days of old it’s been the common consensus that cash is king. As we head towards a cashless society and towards a digitized monetary system the cash is king days are over with. Paper money no longer possesses the value it once had. This is one of the reasons why gold has been able to preserve wealth throughout the ages.
Invest in gold to protect your wealth
Since inflation is a contributing factor to the erosion of the paper dollar into nothing, gold isn’t effected by inflation. The dollar just doesn’t get you the things like it once used to. For instance, in the 1970s gold used to be worth around $40 an ounce. Let’s say you had a choice to hold that ounce of gold or $40 of paper. At that time they both would buy you the same things, let’s say a lava lamp. If you were to exchange your gold today you could buy more than just a lava lamp. The same thing can’t be said for the $40 because it’s value would have remained exactly the same. As for the gold you held onto, it’s value would have increased, it’s just simple arrhythmic.
In today’s economic environment gold serves as a hedge against inflation. A fine example of this is in the 1970s when inflation rose as the U.S. dollar declined. Typically gold serves as a safeguard against both of these situations and appreciates as a result. Once investors realize that the dollar is losing it’s value they will begin seeking more hard assets that don’t lose value over time.
Safeguard your investment portfolio
History has seen the rise and fall of economies on a consistent basis. It’s inevitable, what comes up must come down, so as it’s said. No economy can last forever, unless of course it’s a perfect one. A perfect economy simply doesn’t exist in this world. Most of the time those who invest in gold are often protected from these economic hardships, therefore protecting their wealth.
The yellow metal is an object that is unique all unto itself. It possesses qualities unlike any other metal out there. It’s in our blood, and we are naturally awed by it’s presence. When it’s all said and done, gold can protect you from the declining dollar, inflation, as well as economic upheaval.
Gold will protect your wealth if you include it as a diversifying factor in your portfolio. There are several different ways to invest in gold that you can choose from. Each method has it’s own characteristics. Below are listed nine different ways to invest in gold along with some useful information.
1. Getting physical with gold bullion
There’s a certain aura to those who possess gold on their person. Some investors would rather own physical gold by wearing some of it or storing it in a safe place. You can obtain a variety of gold coins and bars from coin dealers and other precious metals experts. An advantage of possessing gold is that you directly own it. There is no middle man to deal with between you and your gold. Owning gold physically also has it’s challenges. You have to be able to store it in a safe and secure place which can cost a pretty penny. Dealers may attach premiums when you buy bullion and you might get less when you sell it.
Typically you can buy a variety of gold coins and bars from government mints and private sellers.
2. Gold exchange-traded funds
Besides being able to invest in ETFs through a normal IRA, ETFs have more liquidity while you the investor can purchase shares in an ETF fund. Typically, one share is equivalent to just a little below a 10th of an ounce of gold. One ounce of gold can also be equal to ten shares in an ETF. An ETF usually will store the gold for you while it owns it as well. These transactions typically have lower costs than bullion purchases and other physical sales. ETFs are more for those who don’t want to have gold in their physical possession.
Like regular stock market shares, some investors don’t like ETFs because they represent normal assets. Another reason is that some investors don’t like the idea of not owning the actual physical gold. However, similar to other stock market shares, the investor has the ability to buy or sell shares on the open market.
Prices of ETF’s are directly connected to their precious metal’s value, but doesn’t compare to the safety and security offered through the ownership of physical precious metal, which is what a Gold IRA is all about.
3. Gold IRA Investing
It is possible to invest in gold and silver bullion for your IRA retirement plans. Using an Individual Retirement Account also known as an (IRA) also has tax advantages.
If you already have an IRA then it’s just a simple matter of rolling it over to a gold IRA. Gold IRAs are gaining more popularity and interest now days because most American workers have an employer endorsed retirement plan already. People who are active participants of retirement plans are increasingly growing all the time according to the American Benefits Council.
Most retirement plans are 401(k)’s that offer matching contributions to workers. Not only is this an ideal way for the worker to basically pay themselves with a raise of their own but is also an excellent way to grow their retirement savings. It is possible for the employer based IRA to be converted into a Gold IRA Rollover depending on the company.
Factors that can determine if a 401(k) can be rolled over are modifications of a plan by an employing company, the managing custodian is changed, and if an employee retires, quits or is terminated. Generally employees can not convert their 401(k)s if they are currently employed.
Once 59½ years of age an employee still working can do what is known as an “in-service rollover” in a good number of plans. Not all plans allow in-service rollovers while some companies make their employees wait until they are 70½ years old.
4. Gold futures contracts
An alternative to controlling a large amount of gold are gold future contracts. With a few exceptions gold can be leveraged by opening a position with a much smaller amount of investment. You also have to be able to maintain a certain level of margin. For example the New York Mercantile Exchange has a maintenance margin of 3% of the contract which is $4200 of the total contract. At current prices, $130,000 will get you 100 ounces of gold. However you’re still responsible for the full value of the contract and may be required to deposit more cash to make up for any losses. For some, it is well worth the risk for the potential rewards.
5. Gold mining stocks
Gold mining stocks have a more than usual volatility when compared directly with gold. In another words gold mining has it’s own inherent risks. Although gold mining stocks exhibit plenty of activity and production, any combination of things can go wrong. For instance a mining accident can occur causing the mining company’s business to plummet even though gold prices are rising.
On the flip side mining companies can find success when everything happens to be going in their favor. During periods of increasing prices sometimes mining stocks can go up better than regular gold prices. At other times when gold prices fall some mining stocks have even more potential to fall as well.
Always do your homework and research all aspects of a gold mining company. Research such things as production and operating costs if you do decide to go this route.
6. Gold streaming companies
Another way to invest in gold is to buy shares of gold streaming royalty companies. While these companies don’t mine gold, instead they provide financing to mining companies seeking capital. In exchange they receive a share of the gold they produce, often at a hefty discount, a 75% discount is not unheard of. This allows the gold streaming companies to have a nice flow of income from their financial arrangements.
7. Gold exchange-traded notes
An ETN is similar to a bond or unsecured debt note that tracks commodities such as gold. Similar to a bond it can mature over a certain period of time. They are basically instruments of debt that promise to pay the holder according to whatever asset they are tracking. ETNs track commodity prices such as gold and are not subject to tracking errors. Gold ETNs are an attractive alternative as they have the most liquidity of all ETNs.
Other than the usual risks of the market ETNs can be risky. An investor of a gold ETN is taking the risk of the issuing institution (such as a bank) going bankrupt as they do not directly own the gold.
8. Gold futures and options
Gold futures may be a more viable choice for you as they are better suited for short term investments. Similar to arbitrage, buying low and selling high could net you a tidy profit. You could stand to make a good amount of money by purchasing a gold futures at the current price today and make a profit tomorrow if gold rises. On the contrary you could sell the futures contract if you think the price of gold is going to fall and allow the value to build up.
Like other investments, futures trade a lot easier than options and if you do a little homework you can profit when you invest in gold. Gold futures isn’t for the first time investor so make sure to do your due diligence when investing. The good thing about gold futures is that you don’t have to worry about storing the gold since it won’t be in your physical possession.
9. Buy gold numismatic coins
For those interested in history, investing, and having gold in your immediate environment numismatic coins may be your forte. Numismatic coins are different in that they can come in limited quantities, have historic dates or have special marks on them that give them historical and rare value.
Physical numismatic coins is one of the best ways to own private gold wealth and can also be passed down from generation to generation. Those who are just beginning to invest might find this as an attractive and fun way to invest in gold. Three reasons that investors buy these coins are for Privacy, Profit and Protection also known as the three P’s in the industry.
If you are new to this kind of investing it would be wise to find a certified coin dealer. A well versed coin dealer will help you in ensuring that your coins are genuine and authentic.
Gold IRAs are the best way to invest in gold
In a world of global, political economic conflict and threats it makes sense to invest in a Gold IRA. The continually failing dollar and the movement towards a “One World Monetary” system to replace world currencies is a reality that is already here. The need for protection of your wealth is greater than ever now.
Even though gold metal is becoming increasingly rare, it’s value will always hold true. A Gold IRA rollover provides a safe and secure vehicle along with other IRA-approved metals. Gold isn’t going anywhere any time soon and has been utilized and accepted as a global monetary system throughout the ages.
So far in our quest to discover the best method to invest in gold, Gold IRA investing seems to be the most safest and most convenient method offering the most security in our humble opinion.