Investing in gold may be a great way to hedge against inflation and diversify your portfolio. But when people talk about “investing in gold,” they don’t always mean buying and selling physical gold bars when the time is right. Numerous gold investments are available, and knowing the pros and cons of each can help you make a more informed investment decision.
Learn what to look for when investing in gold, including the types of investments available and factors to consider.
What Type of Gold Should You Invest In?
Your first step when looking for gold is determining the type of gold investment. All the following investments allow you to benefit from the relative stability of gold prices and diversify your investment portfolio.
Gold Bars
Physical gold bars are perhaps the most straightforward method of investing in gold. You may see gold bars referred to as “bullion,” an identifier that may also include gold nuggets, bearings, and coins.
Gold bars come in different weights, ranging from one-tenth of a troy ounce to one kilogram. Reliable gold bars contain the manufacturer’s name, the weight, and the purity stamped on them. Be sure to look for a fine gold bar, at least 99.5% pure, to improve your resale prospects.
Many people prefer gold bars as tangible representations of their investments. Even if paper money fails or becomes obsolete, they’ll have that physical gold with inherent value.
The downside of gold bullion is that you’re responsible for storing it somewhere safe. You’ll need to pay to store it in a gold depository or in another reliable location. If it gets stolen, you’ll lose your investment.
Gold Coins
Gold coins are similar to gold bars in that they provide a tangible method of investing in gold. You can find gold coins in various weights and purities, just like gold bars. But you can also find collectible gold coins with value outside of their gold content.
The following are examples of collectible gold coins that are popular among investors:
- American Gold Buffalo
- Chinese Gold Panda
- Canadian Gold Maple Leaf
- Gold Somalian Elephant
- Gold American Eagle
- Gold Australian Kangaroo
These gold coins are somewhat rare, as the manufacturers only produced a set number of each. This rarity factor contributes significantly to their value.
The downside of investing in gold coins is that some collectibles are only worth a few hundred dollars each. Unless you stumble on a high-value coin, you’ll need to purchase a lot of coins for a sizable investment, which could pose storage and security issues.
Gold Mining Stocks
Instead of purchasing physical gold, you might consider investing in stocks in gold mining companies. These companies experience higher profitability when the price of gold increases. However, other factors affect the success of a gold mining stock, such as the company’s business decisions.
If the company hedges against falling gold prices as part of its business operations, gold mining stocks may still be profitable when gold prices decline. These stocks present a unique way to invest in gold, but if you aren’t prepared to follow the gold mining market, you may feel overwhelmed investing in mining stocks.
Gold Jewelry
Purchasing and selling gold jewelry is one of the more enjoyable ways to invest in gold. While gold bars all look the same, gold jewelry comes in numerous styles, designs, and varieties, allowing room for creativity within your investment process.
Here’s what to look for when investing in gold jewelry:
- Purity: What is the actual gold content in the jewelry? If the gold is at least 99.5% pure, it will have a better resale value.
- Design and style: Jewelry trends change frequently, and purchasing gold jewelry that is out of style could make it harder to sell. At the same time, gold jewelry that is currently in style will be more expensive, and you can’t guarantee it will still be trendy when you decide to sell it.
- Hallmarks and certifications: Gold hallmarks indicate the purity of the gold within the jewelry. You should also only consider gold jewelry that comes with a certificate of authenticity.
The main downside of investing in gold jewelry is that its value can fluctuate based on trends. You must also do your due diligence to ensure the jewelry you’re purchasing is authentic.
Gold ETFs and Mutual Funds
Gold-based exchange-traded funds allow you to purchase shares in a fixed amount of gold, such as one ounce or one-tenth of an ounce. This is a more cost-effective way of investing in gold, as even one-tenth of an ounce of gold costs hundreds of dollars.
You can invest in gold ETFs and mutual funds on their own or as part of an individual retirement account (IRA). While these present an easy and affordable method of investing in gold, they don’t give you actual ownership over physical gold, which is important to some investors. If you invest in a mutual fund, you will not have complete control over the stocks in the fund.
Things To Consider When Looking for Gold
Aside from considering the different types of gold investments, you’ll want to evaluate a few other factors to make an informed, strategic investment decision. Here’s what to look for when seeking gold investments:
Market Conditions and Timing
Like any investment, the gold market fluctuates daily. While gold has historically maintained its value more reliably than many other investments, its price changes often.
Gold prices tend to increase during times of economic uncertainty. This is because people see gold as a stable investment that will hold firm during recessions and inflation.
Your goal is to buy gold at a price you’ll be able to exceed when you decide to sell it. But just because gold prices are comparatively high when you want to purchase them doesn’t mean they won’t go any higher.
Examine market and economic conditions to determine the right time to buy gold.
Ease of Selling
Some gold products are simply easier to sell than others. If you’re concerned about finding a buyer or going through a complicated process to sell your gold, you may want to invest in gold bars rather than jewelry or coins.
Gold bars have a set purity and gold content that impact their value. No other factors, like collectability or style, will impede your ability to sell them.
Certain gold coins are also generally easy to sell. American Eagles and Canadian Maple Leafs are highly recognizable gold products, which may make it easier for you to find a buyer.
Gold ETFs and mining stocks are relatively easy to sell on a trading platform. Meanwhile, gold jewelry may be more difficult to sell, as you’ll need to find a buyer interested in the style of jewelry and willing to offer a fair price based on the gold content and the particular piece.
Finding a Reputable Dealer
Choosing a reputable dealer is imperative to your investment. You can’t risk purchasing “fool’s gold” or gold products that don’t meet the indicated purity and quality standards.
Purchasing gold at a pawn shop may be risky; choose a positively reviewed dealer with a solid industry reputation instead.
Oxford Gold Group: Your Reliable Gold Dealer
In this day and age, you don’t need to prospect for gold deposits to invest in gold. You can purchase reliable gold products through dealers like Oxford Gold Group. If you don’t know where to start, you’re in the right place.
Oxford Gold Group takes the guesswork out of knowing what to look for when investing in gold. We offer pure, trustworthy gold products for sale online. Purchase gold bullion and coins with the click of a button and begin reaping the benefits of your gold investment.
Contact Oxford Gold Group today at 833-600-GOLD to speak with an account manager about investing in gold.
