Investing in gold is not that complicated and involves keeping an eye on market trends and price changes. However, investors ultimately only have three options to work with. These include buying physical gold bars or coins as a physical asset, purchasing shares in precious metal companies or ETFs, or trading futures directly in the commodity market.
Depending on your experience as an investor, you may choose to adopt different investment strategies while keeping certain investment principles in mind. These principles are essentially breakdowns of different ways to acquire gold, but we will also provide some general investment principles that apply to gold.
It’s useful to think of a long-term gold investment strategy like purchasing gold bars and keeping them safe in banks or your home. Still, you should also understand other ways of investing in gold, such as through mutual funds and ETFs.
Let’s explore four principles to keep in mind when investing in gold.
Gold Investment Principle #1 – Stack Up Your Physical Assets
Investing in valuable physical assets is a reliable gold investment principle that can help you increase your wealth over time. Gold is a precious metal that protects from various global conditions, such as economic uncertainty and rising inflation rates.
Due to this reason, many investors believe in the principle of stacking up their physical assets by purchasing gold bullion from dealers or banks. You can expect to purchase gold in coin or bar form and choose to stack up these physical assets in your home.
If you’re a new investor, you may choose smaller coins since they are less expensive than gold bars. Investors may also choose to purchase specific gold coins to ensure maximum liquidity. However, since there are many swindlers, you should always try to find the most reputable and professional dealer for gold-related transactions.
When stacking up your physical assets by purchasing gold coins and bars, you also need to pay extra vigilance toward safekeeping and ensure your assets against the possibility of theft. If you invest in gold jewelry, you can also wear it, which is an added benefit of employing this particular gold investment principle.
However, purchasing gold jewelry is not the best investment option since the retail price is much higher than the gold’s meltdown value. Extra craftsmanship costs and retail markup are lost if you decide to resell your jewelry
Gold Investment Principle #2 – Invest in Gold Funds
Owning physical assets is helpful, and many people prefer to keep piles of gold locked away in their homes. However, it comes with some challenges, such as transaction fees, storage costs, and insurance prices. If you’re looking to invest in gold, you probably want more liquid options and a low-cost entry into the world of gold investment. In such cases, investing in mutual funds and ETFs can help you increase your wealth and turn your investment into cash almost instantly.
You may not be familiar with the process of investing in gold shares. For example, to invest in an ETF, you can simply buy and sell shares in a reputed company at any point of the day, understanding that a share constitutes a tenth of an ounce of gold. If gold sells for $1,000 per ounce, a single gold ETF share will cost $100. Additionally, you will benefit from inside information on gold’s price fluctuations and a more diverse company portfolio, such as investments in bullion and trading company shares.
It is worth noting that this strategy has advantages and disadvantages, depending on your risk tolerance. For example, gold-stock prices fluctuate more rapidly than physical gold prices. You can also expect many of these precious metal companies to experience problems related to political instability, meaning EFT investment is a riskier move but offers appreciation potential.
Gold Investment Principle #3 – Invest in Gold Futures Options
This gold investment strategy is perhaps the safest if you don’t want to put too much capital toward acquiring gold. Options on gold futures give you the right to buy or sell assets at certain prices for a particular period. You can use this investment strategy once you notice the price of gold fluctuating and take a chance on your decision to buy or sell at a particular time. If you make the wrong decision, you only lose the premium you paid upon initial entry.
Financial Investment Principle #1 – Create an Investment Plan Based on Your Goals
If you decide to invest in gold, you should monitor your expenses and create a financial plan to acquire gold shares or physical assets. You need to be realistic about your goals, meaning you should take a hard look at what you can save each month consistently. Investing in gold using the money you save each month is a viable strategy that does not cut directly from the money you use for monthly expenses, such as mortgage/rent, groceries, and other essentials.
Your best gold coins for investment plan will likely change yearly as you become more proficient at investing in the right places and learn from market feedback. You should always review your investment plan annually or every six months to gauge the trajectory and make the necessary changes in your life as your financial circumstances change.
One of the best ways to build wealth by investing in gold is to commit to a long-term plan that promises rewards a few years later. Planning for the future is the only way to acquire serious wealth. Investors can begin the process today by making the necessary sacrifices and creating the right investment plan based on their goals.
Orion Metal Exchange allows precious metal investment company to buy, sell, or exchange precious metals like gold. They are a reputed organization that has been functional for four decades and has produced remarkable results for its customers. Contact them today to learn more about their services.
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