Investing In Gold: Basic Tips And Advice For The Best Returns On Your Investment

What are the possible forms of gold for investment and why you should invest in gold.

When looking to add to a portfolio consider investing in gold. There are four main reasons for investing in gold. It has a long-term store of value, is an asset of last resort, is highly liquid and is a good way to diversity your assets. Gold is a reliable store of value because it fulfills all of the functions of money. It is portable, divisible, indestructible, natural, easily recognizable and always accepted as a form of payment. No matter the financial climate, gold endures. While most currencies and commodities generally decline, gold withstands inflation and market fluctuations. It is a secure aspect of any investment portfolio.

Throughout history, while paper money has come and gone, such as Confederate money, gold has remained stable. By investing in gold one doesn't have to rely on the government or corporations for dividends. Most economic policies do not affect gold and whereas bank accounts can be frozen, gold is freely available. Gold is reliable for any planned long-term investments. It can be easily sold twenty-four hours a day, seven days a week in any number of markets around the world. When investing in gold to diversify, one can be either conservative or aggressive and still add value to the portfolio.

The price of gold is not affected by a companies profit unlike stocks and bonds. Its price depends on supply and demand, the rate of the US dollar, inflation and interest rates. But instead of being negative, the price of gold moves in the opposite direction of stocks and bonds. When the market bottoms out, gold generally increases in value, thereby stabilizing the investment portfolio.



Gold can be bought and sold anywhere in the world at anytime. Anytime is a good time to invest in gold. There are different forms that gold can take for investment purposes. The first is gold bullion. This generally comes in the shape of bars in a variety of weights and sizes. They can be as small as one troy ounce (1.09714 regular ounces) or as large as 400 troy ounces. The broker commission on gold bars is minimal and gold bars are often the most cost-efficient means. Bars marked with the "logo" of the refiner are the easiest to sell. The bars are generally 99.5% or higher pure gold, stamped .995 as well as stamped with the bars weight. Bars can be purchased from a number of places such as commercial banks, precious metal dealers and brokerage houses.

Another form of gold for the investor is gold bullion coins. These are often popular because they combine beauty with value. Whereas the coin bears a face value, that is merely symbolic. The true value is based on weight. Coins are minted in 1/20, 1/10, 1/4, 1/2 and one ounce increments. The price for coins is based on the bullion price plus 4-8%. Popular forms of coins are the American Eagle, the Canadian Maple and the South African Krugerrand among others.

Once the decision is made to invest in gold and the form has been chosen, next is the decision as to whether to have physical possession of the gold or to put it in storage. Gold can be delivered directly to the owner and secured personally or can be purchase through an intermediary and stored elsewhere for a small fee. By having a gold storage account, the investor receives a regular statement that tracks their purchases and sales as well as the value of their holdings. Usually, gold held in storage accounts is unallocated and mixed with the gold of other investors. This makes it less expensive to invest in gold. Allocated assigns specific gold bars or coins with markings to a particular investor.

For the more advanced or adventurous investor there are other, more advanced forms of investment, such as numismatic coins. The value of these coins is based on its rarity, the number originally minted, how old it is and what condition it is in. These coins are bought and sold by collectors with gold prices not having much affect on the price. These coins have a much higher value than their gold content. Also available are gold future contracts. With this form of investment the investor agrees to either make or take delivery of an agreed upon amount or quality during a specific month in the future at a specific, pre-arranged price. The price is determined by what the possible "forward carrying" cost for gold would be at that point in the future. Gold mining stock is part ownership of a corporation. To do this it is important for the investor to be familiar with the mining company and its financial status and potential future earnings.

Whatever forms the investor chooses gold is a solid, financial investment and a good way to diversify the portfolio. Gold helps to stabilize a portfolio, thereby balancing out riskier investments such as stocks and bonds.

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