Investing in Gold – Four Ways to Invest


When it comes to investing in gold, there is certainly more than one technique that buyers use. However, if you are looking to spread the risk out over a longer period of time and lessen the potential downside of your investment, you should put a fixed amount of money toward your gold investment every month, not matter its current price. This is called dollar cost averaging, and is considered to be the first rule of thumb with gold investing. The amount you choose to investment each month should range between 3% and 10% of your gross monthly income. More aggressive money managers will recommend that you allocate 20% to gold investing. There are four ways to invest in this protection again inflation, currency debasement, and global insecurity.

First, you might choose physical gold bullion, coins, or jewelry. Your hard assets can be stored in safety deposit boxes or in a safe in your own home. It can be bought and sold from local jewelers, though you should avoid hefty premiums when investing in gold of this nature. Look for gold as close to spot price as possible with no more than a 10% premium.



Next are ETFs, or exchange-traded funds. This allows you to have gold exposure in your portfolio without having to store physical assets. The most popular form of ETF is SPDR gold shares. Each share you buy puts the equivalent of 1/10 of an ounce of gold in your possession.

Then, there are ETNs, or exchange traded notes. This is a riskier venture, but therefore leaves room for greater gain. You pay the bank a sum of money for a certain amount of time. At the end of the period, you are paid a return based on the performance of the gold futures market. This option is flexible and can be invested in short or long-term, but there is no protection against the principle, which means you could lose all your money investing in gold of this nature.




Fourth and finally, you can invest in miners through gold-mining stocks. This is a fairly risky venture since mining stocks can have as high as a 3:1 leverage either up or down to the spot price of gold. If you are interested in choosing gold stocks to invest in, find companies that showcase strong production and reserve growth. Do not make the mistake of investing in gold by choosing small mining companies with no cash flow yet, because this is as risky as buying a lottery ticket.For more information on investing in investment opportunities usually or normally not found in the marketplace, click here!



Sean Johnson is an Investment Advisor for [] an Investment Referral Service for investors requesting information on specific investments.

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