How to Invest in Gold

Gold is one of the most valuable commodities one can choose to invest in and many people choose to invest in it for two main reasons. Firstly, traditionally gold is seen as the ultimate investor haven and secondly, it is used as a hedge to currency. Having gold as your investment provides protection against currency debasements, future price uncertainty and market inflation

There are several ways that you can use to invest in gold including;

Gold bullion.  One rule of the thumb when it comes to investing in gold is to avoid huge premiums.  Advisably, buy your  physical gold in whatever form be it in coins, bars, jewelry you name it as close to the spot price as possible.   Reason being, buying in big premiums heightens the investment risk and unless the prices rise so high, you may end up not benefiting from the investment.  On the high end, consider premium of up to 10%. Investment options for your physical gold including storing as you wait for a rise in the market price, buying and selling the gold either as jewelry or any other form you see fit or even trading the metal with other companies that deal with the metal business. While at it, it is also advisable to keep your trade to one form. That is, in as much as trading in numismatic coins may seem a tempting venture; you may want to consider leaving it to coin dealers unless of course you are ready to endure the risks that come with such a venture.


Stocks.  Investing your gold in stocks can be one of the riskiest investments you can take. Trading your gold in stocks offers greater risk because you will be trading in wider equity market. However, trading in stocks can also offer you a platform in which you can make some of the highest trade profits for your investment. To reduce risk, it is advisable that you trade through a company with a good reserve growth and a strong production with good management and with the right support. While at it, it is also important that you buy the right amount of stocks. Too few stocks will pose more risk whereas too many may lead you to acquiring mediocre mutual fund.


Gold ETFs. This is one of the most popular ways for you to have exposure without necessarily going through the hassle of being in possession of physical gold. ETFs work by offering shares to traders which can be used in place of the physical gold to trade.  Because the gold is shares or paper form, you as the investor will co-own the same gold with the real owner of the gold. The profits you will make using  ETFs will be taxed the same way as an investor trading with physical gold and depending on your needs and the company through which you trade, you can choose to trade your EFTs profits for real gold.  Trading in EFTs is one safe way for investing in gold; however, the major problem with this form of investment is that, you as the investor cannot be sure that the real gold exists. Again, when it is a bank storing the “paper gold” you will be using to trade you as the investor will automatically become a creditor of that bank.

There are several other ways through which you can invest your gold.   Your mode of investment however, should be determined by among other things reasons for investment in gold, the quantity or otherwise amount you want to invest and lastly, how long you want the investment to last.

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