The Various Forms of Ownership in Gold
Soaring gold prices and rising inflation have caused a lot of people to sell their old gold and scrap jewelry. While gold was recently at $1,000 an ounce, it has fallen to about $930 an ounce. Many jewelers have seen slumping sales as the price of gold has risen over the past year. People find more financial sense in selling their gold rather than buying it if they are in a crunch.
But gold jewelry is not the best way to own gold. As a matter of fact it is probably the worst. The real value of the jewelry is subjective and prices change with the craftsmanship, design, and other gemstones. Unless you are a seasoned jeweler, stick to jewelry for what it is: an accessory. Sell it if you have and need money. Buy it if you can afford it financially.
What are some of the other ways to own gold if your plan is long-term investment?
Gold bullion bars and coins
This is a common way to own gold. Bullion bars and coins come in many different shapes and sizes, such as the American Eagle gold coin. They are a cost-effective way for investing in gold that you can actually touch. Weights will vary from piece to piece, but they should all be close to, if not all, solid gold.
Allocated Accounts and Gold Certificates
Allocated accounts are the most secure way to invest in gold. A recognized dealer stores and manages the gold, and you have an account to reflect the actual value. They do this for many people at a time.
Gold certificates are similar, but the transfers and payments in gold are made electronically instead of transferring the actual gold. The physical gold is stored in vaults whether at banks or currency operators.
Gold futures are essentially contracts that promise to make or take delivery of gold, with a specified quantity and quality, at a predetermined date with a predetermined price. Gold futures are a risky way of investing in gold (as its not technically a long-term investment). You can make a lot of money with gold futures, but you can also lose a lot if you don’t know the gold market.
Shares and Funds
These shares and funds not only invest in gold, but in the companies that produce gold themselves. They offer a very diversified investment opportunity.
Funds like Merrill Lynch can perform very well, and have been known to outperform gold. You are essentially investing in a company, or many companies, that mine, refine, and deliver gold and gold products. The downside is that you are often investing in companies that operate in the 3rd world, so learn about the human rights performance of a country if that is something that concerns you.
Gold Exchange Traded Funds
Exchange traded funds are traded on the stock market and are close in value to the actual gold asset.
To learn more about gold investing, you can visit this gold investment website
Posted in Gold Investing