Gold investing is one of the most widely diversified forms of investing. Unlike most other investments, this one has little to do with the stock market, where stocks and bonds often take the majority of the investor’s resources. Gold investing, however, can be leveraged against other assets, including foreign currencies and precious metals. Because gold is highly liquid and can be easily manipulated, it serves as a sort of base currency. While it depreciates in value, it also can be easily stored and sent across many distances.
One type of gold investing involves purchasing gold bars from the physical market. This involves visiting a specialized broker and buying large amounts of gold bars at one time. When these bars are purchased, they will then be melted down and refilled with coin-like Troy ounces of gold. This is one of the oldest and most profitable ways for investors to buy gold. Today, refiners and mints often sell gold bars for minted coins.
Another type of gold investing involves purchasing gold from the futures and options markets. Like investing directly in bullion bars or mints, you purchase the asset and then wait for an increase in the price. By diversifying your assets, you can increase the amount of risk and reward, but you will only diversify by buying a futures contract or agreeing to buy a spot contract.
The final category is known as numismatic gold. These are collectible and decorative gold items. Some popular examples include gold statues, jewelry, and even gold coins. This type of investment is great for those who want to own physical objects associated with certain periods in history. A great example would be to purchase antique gold coins during the reign of Queen Elizabeth I.
Investing for the short term, also known as day trading, is another option for those interested in diversifying their portfolio. The main benefit to this form of investing is the chance to earn profits very quickly. Typically, people who day trade purchase gold and other commodities at a discount. After the transaction is completed, they immediately sell the products for a profit. While day traders often profit, it’s important to remember that this type of investment is not meant to provide a steady long-term income.
One of the most common forms of diversification is stock market investing. The idea behind investing in the stock market is to purchase companies that you believe will increase in value over time. Because the value of shares is based on the overall economy, stock market investing is most effective when coupled with inflation. The general rule of thumb is to purchase shares of a company you believe will do well, and then add them to an investment portfolio designed to minimize risk of loss.
Another option for investors is gold mining investing. If you are looking for an opportunity to invest money into an activity that provides long-term potential profit, gold mining can be a good option. While the overall profitability of this type of investing is not great, the bottom line is that you need to own a piece of property that can generate revenue to pay for development. If your goal is to create wealth by owning gold mines rather than lining someone’s pockets, consider looking to companies that drill for and mine precious metals.
Investing in gold bullion and coins is another option. Similar to stocks, the profit potential is extremely good depending on the price of gold. However, you have to purchase gold bars or coins from a physical source rather than invest in a mutual fund that pools investments from several other sources. As with gold mining, the profit potential is extremely high with an annualized return of around 30%.
