It should come as no surprise that very few investments have been able to rival the popularity of gold. Throughout history, it has served as a coveted substance, and today, it retains its valuable status. Once upon a time, there were very few methods of investing the precious yellow metal, but now there are a variety of ways. Moreover, it is not limited to just being physical; now, investors can obtain it digitally.
When it comes to gold investments, there are plenty of options for investors to choose from. Their choice will ultimately depend on certain factors such as risk tolerance, budget, and experience.
Bullion is usually the first thing people think of when it comes to gold investments and for good reason. It is essentially big gold bars stored in a vault. Bullion often comes in the form of bars that range from a few grams to over 400 ounces. However, one-ounce and 10-ounce are the most common.
Bullion can be costly, and unlike stocks, buying portions of a bar is impossible. Due to how expensive it is, it is important to work with a trustworthy dealer. Additionally, being up to date on gold prices will aid in picking the right time to make the purchase. A lot of dealers will revise their prices depending on current spot prices. An alternative option would be to spend some money on storage either in a safe deposit box or a hefty vault.
Most gold coins typically weigh one or two ounces, though other options include half-ounce and quarter-ounce coins. Collectible coins (ex. Canadian Maple Leafs, South African Krugerrands, and American Gold Eagles) are the most widely available gold coin type. Some dealers will sell coins that are blanks, worn, or even damaged.
It is important to remember that gold coin prices don’t wholly align with their gold. Sought-after collectible coins are frequently traded at a premium price. What’s more, an investor can easily find better deals from pawn shops or local collectors. On the other hand, the safer route would be to buy from a reputable dealer.
In the modern era, another way to invest in gold emerged in the form of gold-backed cryptocurrency. This type of crypto is a digital currency whose value is pegged to the value of physical gold.
Most digital coins have an intangible value that is based on trade volume and investor popularity. Be that as it may, gold-backed crypto has an associated physical and tangible value that correlates with gold’s spot price on the market. Bitcoin and other altcoins have arbitrary price fluctuations whereas gold-backed cryptocurrencies’ value rises and falls alongside the cost of gold.
The value of gold-backed crypto never drops below the value of gold, which effectively provides these cryptocurrencies with their admirable stability. With that said, the value of cryptocurrencies backed by gold can exceed the value of gold.
Jewelry made of gold
For the casual buyer, gold jewelry is the most familiar form of gold. They are decorative items recognized by everyone and, with the right care, they sustain their beauty for many years.
Gold jewelry provides several advantages that gold bars typically don’t, including:
- It can be inherited by family or friends.
- The resale market of jewelry aficionados is quite large.
- A majority of homeowner insurance policies cover it.
For all the benefits, investing in gold jewelry has its fair share of risks that investing in pure gold lacks. For example, when buying gold jewelry as an investment, there is a difference between retail prices and scrap value. Additionally, one must be aware of the jewelry’s purity (i.e. the gold percentage). Calculating gold purity is done using karats; 100% gold is 24 karats. The lower the purity, the lower the piece’s melt value will be. In other words, it decreases the jewelry’s components’ raw value should it be melted into pure gold.
Investing in gold guarantees an array of advantages, the most notable one being portfolio diversification. With different methods of investing in gold (other options include derivatives and ETFs), investors can reap the benefits in numerous ways.