For us, the best type of gold to buy are physical gold bars. The precious metal has been valued for centuries as a safe haven in which to cultivate and store wealth, and physical ingots best reflect these qualities today. Instead of investing in a single gold-linked company, one invests in a basket of gold-related securities through gold mutual funds or ETFs. Gold funds can track the price of gold, include the shares of several gold mines and refineries, or offer exposure to gold futures and options.
For investors willing to take on more risks, futures and options may be attractive. If none of those words already mean anything to you, you should probably avoid these gold investments for now, as they are highly speculative. Investors can invest in gold through exchange-traded funds (ETFs), buy shares of gold miners and associated companies, and purchase a physical product. These investors have as many reasons for investing in metal as there are methods for making those investments.
Gold ETFs focus on owning physical gold or the shares of gold mining companies, creating different risk profiles. An ETF focused on holding physical gold bars offers investors direct exposure to the price of gold. They tend to adapt relatively well to the movement of the price of gold. However, ETFs have a cost in the form of an ETF expense ratio.
However, the cost may be worth it, as gold ETFs are usually the easiest way to invest in gold. The biggest advantage of using futures to invest in gold is the immense amount of leverage you can use. In other words, you can hold a lot of gold futures for a relatively small amount of money. If gold futures move in the direction you think, you can make a lot of money very quickly.
You may be familiar with the popularity of gold coins in infomercials and other advertisements. This way of buying and selling gold is well-known and often more convenient than gold bars due to their smaller size. Investors can buy gold coins from collectors or private traders and eventually sell them for profit. Dealers are located in most cities, making gold coins easy to obtain.
To make buying easier, gold coins are one of the best ways for beginners to invest in gold. Investing in gold stocks, ETFs or mutual funds is often the best way to expose yourself to gold in your portfolio.