When inflation and devaluation of currency hit hard everyone looks for how to invest in gold. It is difficult to make an investment when you are considering only one commodity to invest like gold and oil. Because of your success and your loss, all depend on the single decision. So, it hard to decide either to invest or not. Just like other commodities price of gold determined by the demand and supply.
China, Australia, and Russia are the largest producers of gold. Most of the gold comes from hard rock mining or it also produced with the placer mining method and from copper mining as a by-product.
Major demand comes from three industries, the very first one is jewelry, financial institutes like banks which use it as the reserve and electronics industry in the last one.
At this moment the US is the largest gold holder, Germany comes at the second number and the international monetary fund is in third place. Private buyers always buy it as ornaments or as an investment.
When to Invest in Gold?
This two are the most important questions which everyone should know. When the inflation expected to take hold that time is best to invest in the gold. As early as you detect the signs of inflation and invest in gold the more secure you remain in the time of inflation and more room you have to make money from your gold investment.
Political turmoil and stock market crashes are some early signs which indicate a future devaluation of the currency. You may consider such signs as an opportunity to invest in gold.
Until the local currency is strong, inflation not expected it will not provide any room to gold prices to rise. On the other side if there is increased demand from industry or from emerging markets that will also lead to higher gold prices and you may invest to make money at such times.
There is no loss for the original gold investor who owns the gold to hold for a long time, he will definitely make money from that. Prices and economies always move in a cyclical way so always consider buying this yellow metal when prices are on the low.
What Percentage of a Portfolio Should Gold Make Up?
For traders, there is no hard and fast rule everyone makes a rule for his own, many times stock trader only hold gold but most times they just consider investing in it as a percentage of the portfolio. In fact, it also depends on the trader how much is comfortable with the volatility of gold prices.
Gold is an instrument which performs well when the stock market is in bearish and this is the reason traders prefer to move towards gold when they sense a bear market.
If you are not investing in stocks and only considering investing in gold, then it will be best to hold it physically for long-term investment.
What are the ways to Invest in gold?
There are several ways to invest in the gold, read detail and choose one as you feel convenient with. Nowadays more options are available as compare to 100 years ago,
- Gold Futures & options
- Gold Coins
- Gold Companies
- Gold ETFs
- Gold Mutual Funds
- Gold Bullion
- Gold Jewelry
Gold Futures & Options
Gold futures and options on futures is really a good choice to consider the reason is leverage for those who understand the leverage they can use this option well. As with the leverage trading, the return can be double or triple at the same time so experienced traders always choose this option.
For the novice, trader leverage is a two-sided sword which can make good money and even can eat up your capital. So, when you invested in yellow metal through futures you need proper learning and understanding of the futures market.
Either you do as a hobby or for pure investment purpose it basically an investment in gold with a small denomination, easy to carry and easy to sell. There are a lot of patent companies which are offering coins and available with local retailers.
It’s easy to buy coins and easy to sell as readily accepted in the local market. American Buffalo, American Eagle and St. Gauden’s are the top names in coin making.
Under this option, investors buy shares of gold companies especially the companies which produce or refine and sell gold as the phenomena are simple when the prices of gold rise the shares of these companies’ rocks.
But not in all cases risk always remain there. This option is not suitable for an investor who only wishes to invest in the gold. More commonly this option is the preferred choice for stock traders.
Invest in a Gold ETF
A gold traded ETF is an exchange-traded fund which specializes in gold trading and backed their investment with the gold, means real gold in the back or maybe other gold related securities. In such funds, professional minds decide and advice is also available for investors.
Their diversification and risk management can be a good advantage to consider them. For those who cannot make their own investment decision and risk mitigation for them investing in the gold, ETF is suitable. Street TRACKS Gold Trust and iShares COMEX Gold Trust are the two biggest names in gold ETFs.
Gold Mutual Funds
If you are ok with the steady but consistent gains, then gold mutual funds are a good option for you. Gold mutual funds invest little to no assets in physical gold means they are not holding physical gold. They in the actual hold the shares of gold mining companies and earn returns from there.
Professional minds decide and mitigate risk before every decision so there is no need to worry for the further investment decisions once you place your money with them. Tocqueville Gold (TGLDX) & Gabelli Gold Load-Waived (GLDAX.LW) are the top-rated Gold mutual funds.
This is an option for the large investor to hold gold of bars it is always available to buy on the premium which may vary from 1 to 10 percent but most of the time remain below 4%, Bars make it easy to keep the gold safe and also makes transportation easy. Nowadays it is also possible to hold gold out of border because there are many brokers and banks worldwide which sell gold and offer safe custody.
One thing which makes gold bullion different from jewelry is, it did not have any artistic value to buy it you need to pay the premium. You can keep it safe at your home on another place it will cost you a little whom we call maintenance charges.
Well, you can wear it as a ring or as a chain or as other ornaments. When you are buying jewelry, you are satisfying your need and you are investing in the gold. Whenever you are in the mood to purchase some make it fast as it will act as your investment and will save you from inflation and devaluation of currency.
When all other investments fail the gold can become profitable especially for those who hold it the long time. For short-term trader, there is a lot of volatility and liquidity to earn from this yellow metal. As an investor understand the specific gold investment thoroughly before investing.