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3 Simple Ways to Invest in Gold

Futures

3 Simple Ways to Invest in Gold

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gold-chartFor years I have been hearing of news praising the rise of gold price and how no one has ever lost money by investing in gold! I often wondered why people don’t go buying gold if that’s such an easy way to turn profit. Gold investments are more attractive during war times, but even during peace gold price’s increase hasn’t slowed down a bit! So, are you getting worried of political or economic crises like the European sovereign debt crisis and want to invest in gold as a hedge? Here are 3 simple ways to invest in gold.

Buy Gold bullion or Gold coins

gold-bullionBuying gold bullion is the first thing that comes to mind in relation to gold investing. We all have seen gold bars in one way or another, most often in movies! Imaginary rich people showing off their full-of-gold vaults and expert teams trying to rob well-hidden gold bullion are quite common in action movies. Yet, we are here to actually buy gold, not steal it! So, where do we buy gold from?

Most notably from the banks. Major banks will help you in the most traditional way of investing in gold but I would expect a hefty commission to be charged in the process. I once read that you can buy parts of gold bars owned by the bank, in case you want to invest a certain amount of money that can’t be exactly converted in standard 400-troy-ounce gold bars (12.4kg or 438.9 ounces). Gold bullion dealers also provide the same service and you may find several of those online.

Krugerrand-gold-coinBuying gold coins is an alternative way to invest in real gold. The most widely-held gold bullion coin is Krugerrand and again you have to come in contact with dealers.

Invest in a Gold Trust

A gold trust holds gold and issues shares in exchange for deposits of gold and distributes gold in connection with redemption of shares. The investment objective of the Trust is for the shares to reflect the performance of the gold bullion’s price. The most popular gold Trust is SPDR Gold Trust (ETF) that is traded in New York Stock Exchange under the GLD symbol.

SPDR Trust Gold held at HSBC's vault

SPDR Trust Gold held at HSBC’s vault

You’ll notice that GLD shares price fluctuations coincide with the actual gold bullion’s price fluctuations since its inception in 2004. The famous hedge fund manager, John Paulson, holds allegedly nearly 23% of his Paulson & Co. portfolio in the SPDR Gold Trust! This way of investing in gold can be done from your comfort of your desk by buying GLD shares in the stock market. ETF trading is also used to invest in Greek stocks if you are concerned of the European crisis.

gld-etf-chart

Buy Gold Mining Stocks

Another simple way to invest in gold is to buy shares of gold mining stocks. I myself have invested in AngloGold Ashanti stock in July and my investment has already gained 15%. Other gold mining companies that you can be a shareholder of include Goldcorp Inc., Eldorado Gold Corp., Gold Fields and IAMGOLD Corp. to name a few. However gold bullion price does not define these stocks’ prices per se, since stock performance also depends on the gold mining companies’ financial and management status. A rise in gold price would certainly benefit the shares price whilst competition or unforeseen events (like a mine’s collapse) could seriously affect your gold investment.

Jim entered the financial world by trading sports and now invests in US stock markets and forex, trying to buy low and sell high. Connect with Jim: StockTwits | TradingView