Many first-time investors get emotionally involved when they first start investing in gold – after all, it’s very exciting.
However, once they get over the initial flurry of excitement, they need to come back down to reality and consider their options very carefully. There has been a sense of urgency over recent times as gold has risen dramatically over the past years but has dropped a bit over the past few months so now is a good time to buy. Analysts are predicting that record gold prices may be just around the corner as the Federal government will have to stop printing money at some point in the near future.
Therefore, now is a great time to understand the steps involved in gold investing and the various gold investment options available.
Gold investments should be diversified
It is always a good idea to minimize the risk of asset devaluation by diversifying your asset types. This holds true for gold as well. Lots of newcomers to the world of gold investing have the misguided perception that a gold investment is expensive and can only be done by purchasing huge gold bars. Even high net-worth individuals rarely invest solely in gold bars. Just one 1 kilogram gold bar can cost over $40,000, so this is obviously not a wise investment choice if you’re looking to liquidate at short notice. Not many people in the market today have a spare $40,000 lying around to buy a 1 kilogram gold bar!
Thankfully, there is a huge variety of gold investment options available today. Some are the typical tangible assets in the form of bars and coins. Others are like more traditional investment vehicles like shares in gold mines and funds that have a large exposure to various gold asset classes. All of these can potentially be used as a way to boost an IRA and help preserve and protect the value of existing retirement funds.
A popular investment option for investors are holding shares in gold mining companies. Generally, the value of these companies is bolstered by the close association with the relative stability afforded by gold. The majority of investors prefer the option of monitoring the performance of their gold mining stocks just like any other stock. These investors usually employ various analysis techniques to determine whether the company behind the stock is viable and has future profit potential.
Other investors want to invest in physical gold but either don’t have the available funds to buy some, or simply don’t want to invest too much. In this case, a gold ETF is a good option. A gold ETF (exchange traded fund) is basically a particular type of mutual fund that invests its customers’ shared funds in things like gold bullion, gold stocks and other gold-related investments. However, unlike a mutual fund, gold ETFs can be easily liquidated on the open market without any restrictions on having to wait for the right time to exchange them.
The tax advantages associaited with ETFs are also another big advantage over other forms of investment opportunities. It is these benefits that have attracted well known investors such as Jim Rogers into gold ETFs.
Whilst gold stocks and gold ETFs have their advantages, many investors still cannot resist the urge of investing in physical gold. They eschew the complexities and limitations of stocks, mutual funds and other paper forms of gold investments, and prefer accumulate their wealth by investing in actual physical gold itself.
One big thing to keep in mind when deciding to invest in physical gold is to make sure that the gold being purchased is actual bullion gold. There are plenty of companies out there who will try to sell you all sorts of gold but unless the gold can be guaranteed to be of a high level of quality or ‘purity’, you may end up losing all your money. Gold bullion comes in a whole range of different sized bars and coins.
There are many companies from around the world who specialize in making gold bars for the general market. As an example, PAMP Suisse are well known for making 1-ounce bars of gold that are very popular amongst the smaller investor. If you’re looking for something a lot bigger (and a LOT more expensive), then the 1-kilogram gold bars from Johnson Matthey may be more your thing. All the more well-known and highly regarded companies will provide you with certificates of authenticity when you buy their products, so these gold products always sell very quickly and easily.
Gold coins are one of the most popular of all the gold investment options on the market. Typically smaller than most of the larger bars, coins are an extremely efficient way to invest in gold as with the smaller size of the coin, it is much easier to sell on the open market. The legal-tender coins issued by the various national mints of countries such as the United States, Canada and China are especially easy to liquidate with a minimum of fuss. The American Gold Eagle is probably the best known of all the gold coins and is often used as a legal and time-tested way to diversify asset classes in retirement funds.
In summary, there are many different options currently available to those investors looking to invest in gold. Retirees in particular have a several different gold IRA investing options open to them which allows them to use their IRA to invest in gold in a simple and tax-effective way. There are a multitude of companies that provide assistance in rolling over funds from traditional retirement funds into gold backed IRAs. To find a company that will suit your needs and particular circumstances, read these reviews of the best gold ira companies.