Gold investing has long been seen as a way to hedge against falling economies. The price of gold is driven by supply and demand, just like commodities. It is estimated that mining companies produce about 2500 tons of gold a year. From this, only 500 tons goes to GETFs and other gold related investments. Gold investing requires that you know what you can afford to buy. You need to have a clear idea of whether you are buying gold for a short term investment or a long term investment.
It is very different from trading stocks on the stock market. It can be awkward because you have to find a place to store it and moving it around can also be difficult. Bars are also more popular than gold coins because they carry lower premiums. It is estimated that premiums can be $50 per ounce cheaper on kilo bars than on gold coins. For the purpose of gold investing, bullion gold bars can be a good way to invest your money. When selling the gold, make sure that you exit at a time where price is higher than you bought it at.
A common way to own gold is by buying gold coins. There are many kinds of gold coins like the American gold eagle, krugerrands, Australian gold nugget, and British sovereigns, to name a few. You can buy these gold coins through various certified dealers. Care must be taken when choosing a dealer to buy the coins, because there are also fake coins that can be touted. Investors prefer gold investing in the popular American gold eagle; it comes in values of $5, $10, $25, and $50, which are face values.
Another alternative to buying and selling individual stock picks and going through time consuming chart analysis of stock charts is investing in mutual funds, open-ended investment companies (OEICs), closed-end funds, and unit trusts. Investing in these funds will spread an investor’s exposure to risk. There are many precious metal funds for investors in the US, which can help diversify your portfolio. The advantage of gold investing in funds is that if one or more companies see a decline in there share price due to the stock market, this will not affect the fund greatly as it is not dependent on one or two companies. A broker can help you and give you stock tips on which funds to buy, while a technical analysis of the market will help your chances of making a profit.