Gold is and has always been a symbol of wealth. Whether it was the kings’ and queens’ days or today, gold remains a significant part of the international monetary system. The world market still considers insurance against fiat currencies that count on sheer faith to hold their relative values.
All these reasons are why gold is still a viable and profitable source of income. Experienced investors have always relied on gold to provide a hedge against troubled economic times like during 2020. Investment in gold is always a good idea, and it offers diversity in your portfolio.
Here are the five best gold investments for amateur and experienced investors who want to invest in gold.
The first and most straightforward options for new investors are gold bars and coins. On top of it, it gives you the mental satisfaction of owning physical gold. But you need to safeguard it from theft and insure it; that’s a headache if you own a decent amount of gold.
To earn generous profits on physical gold, investors or owners depend on the commodity prices to rise. It contrasts to business owners where the organization can generate more gold and earn profits, driving their investment.
Buying gold bullion is simple, given that you find a reliable source like RPS Gold in London. There are several online dealers other than your local collectors. You can even find gold bullions in pawn shops and private and government mints. The only thing to note here is gold’s spot value when you’re buying since it will help you strike a fair deal.
Gold ETFs (Exchanged Traded Funds)
If you want to avoid the tension of owning physical gold, then it’s better that you invest in ETFs that track commodities. These are some popular and largest ETFs in the market:
- SPDR Gold Shares (GLD)
- iShares Gold Trust (IAU)
- Aberdeen Standard Physical Gold Shares ETF (SGOL)
The sole purpose of ETFs is to match gold’s market performance without the annual expense ratio. As of July 2021, the expense ratio for the ETFs mentioned above was a mere 0.4%, 0.25%, and 0.17%. As an investor, you can even exchange your ETFs for cash at a market price more quickly than bullion. That is a significant advantage of investing in ETFs over bullion.
Gold futures are contracts that exchanges trade where a buyer agrees to buy a certain amount of commodity at a pre-agreed price on a given date in the future. It is an excellent method of speculating on the gold price rising or falling. If you want, you could even take physical delivery of gold.
The most prominent reason investors use futures to invest in gold is the enormous leverage it offers. Simplifying it: as an investor, you can own as many gold futures as you want at nominal prices. If the gold futures shift in the direction you speculated, you can earn good profits very quickly.
Another popular way of using rising gold prices to your advantage is to own some mining stocks that produce the metal.
Here’s how investing in mining stocks proves more beneficial than investing in gold itself:
Once gold prices rise, the miners are the first to earn profits.
The miners hold power to increase gold production over time. That’s a double advantage.
As an investor, it means you don’t have to rely on gold’s rising price alone to reap profits on your investment.
ETFs of Mining Stocks
If you don’t wish to invest in gold companies, you can buy ETFs which own gold companies. Owning these ETFs will expose you to the largest gold miners in the market. As all ETFs are diversified funds across the gold sector, a single underperforming miner won’t affect your portfolio hugely.
Some of the more considerable funds here are:
- iShares MSCI Global Gold Miners ETF (RING)
- VanEck Vectors Junior Gold Miners ETF (GDXJ)
- VanEck Vectors Gold Miners ETF (GDX)
As of July 2021, the expense ratios on these funds are 0.39%, 0.52%, and 0.51%, respectively.
As mentioned earlier, you can buy gold easily, but you should look for a reliable source. While gold remains a popular and profitable investment, you need to understand the risks involved. Doing your research is better than relying on other people’s words, even if they are your close friends or family. If you are looking for a reputable source for buying gold in London, RPS Gold is the finest choice.