There are four different ways how to invest in gold.
Each way has it's pro's and contras.
We show you how they work:
- physical gold (gold bars and gold coins)
- gold etfs (investment funds holding physical gold)
- gold derivatives (options, futures, certificates and structured products)
- gold stocks (stocks from gold mining companies)
All these four possibilities offer different security, availability and costs.
Each way is used different:
Physical gold qualifies as alternative currency and protection from a collapse of the financial system.
Gold etfs offer a good possibility to invest bigger sums into gold and some of them grant a currency hedge against the USD.
Gold derivatives are suited for traders and gamblers, seeking for leveraged investments in order to gain a huge sum with a small investment. Or - for conservative investors willing to protect their gold against a price decrease.
Gold stocks offer an additional form to profit from rising gold prices. They pay investors a dividend and offer protection against a gold ban by the government forbidding the people to own gold.
Tips for first-time-investors
Beginners, who just start to buy gold should consider the following advice:
If you want to buy gold, consider it as a life-time investment and insurance against worst-case-scenarios. The timing should not be too important. Buy some gold from time to time in order to achieve a good average price. If you want to have gold for protection, buy physical gold. Go to the bank or the metals-dealer and buy some of the usual standard gold coins or bars.
Store your gold in a vault or safe place offering protection against theft and losing. An additional advantage is, that you do not recognize the daily price movements. For long term investors, daily movements are just not relevant!
Just invest money you really do not need. Keep enough cash to be liquid. Never buy gold on credit. Your gold treasure should be an emergency-reserve you don't have to touch.