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Here’s How To Invest In Gold

There’s a reason why the California Gold Rush of 1848 brought, well, a rush of nearly 300,000 people to California: gold was seen as a sure-fire investment, an instant guarantor of income and wealth. Although in today’s market gold’s value and strength has diminished, it’s still worth taking a look at if you’re seeking a golden investment opportunity.

But remember that if you buy gold, make sure it offers a way to make money. For the safest investment, consider purchasing gold if it’s part of a diversified set of investments that pay dividends.

Photo: Flickr/slworking2

Good As Gold

Sure, they don’t shimmer and shine like gold itself, but shares in gold mining companies are valuable and worth checking into. The upside: if the price of gold falls, you might still stay ahead of the game if the mining company turns its attention and operations to another metal.

The downside: the value of mining stocks, as with any stock, can decline if the market plunges. And keep in mind that, unlike a tech company, a mining firm could experience a mining disaster that results in loss of life, or environmental havoc that causes the company’s stock to bottom out.

Photo: Call Put Strike

Worth Their Weight In Gold

Looking to invest in gold but want to avoid the uncertainty that comes with investing in one particular mining company? Take a look at gold exchange-traded funds (ETFs). Traded like stocks, ETFs consist of investors’ pooled money that’s directed into a selection of gold and mining companies. Because ETFs are diversified, the investment risk is reduced, but they can still be impacted by stock market ups and downs.

Photo: Pixabay/cherievilneff

Go For The Gold

The allure of gold never gets old. Gold jewelry. Gold coins. Gold bars. All offer a means of investing in gold that seems easy and immediate. But buying gold as an investment comes with its own risk, and before making a purchase you’ll want to have a reasonable expectation that you can sell the gold you’ve purchased for more than you paid for it.

Gold prices are not easy to predict, and can fluctuate significantly. One example: in the 1990s, gold prices hit a high of $300 an ounce, then in 2009 its value rose to $800 an ounce, followed by a leap to $1,900 in 2011. But by 2013, gold value had fallen to $1,300, where it remained as of 2019.

Photo: Pxfuel

The Future Is Golden

Gold futures offer another means of investing in gold, albeit one that’s a bit complicated. Gold futures are contracts in which you agree to buy a specific amount of gold at a specific price at some point in the future. Contracts usually stipulate a minimum purchase of 100 ounces of gold; traders focus on strategically buying and selling futures contracts to maximize their profit from the changing price of gold.

When it comes to investing, remember that, unlike a company, gold itself doesn’t make any money. Gold’s value lies in the costs associated with mining it as well as current market demands. Which means that not every gold investment you make is guaranteed to have a silver lining. See what I did there?