Of all the valuable metals, gold is probably the most widely used as an investor. Investors usually purchase gold as a means of diversifying financial risk, particularly through the use of derivatives and future contracts. The gold market itself is very susceptible to extreme volatility and speculation, as are many other markets. Gold has been at the center of many world affairs since its discovery by early humans. Its uses and value go back for thousands of years.
Any serious investor will tell you that you cannot separate your assets from your liabilities. That is why investing in any sort of asset carries inherent risks. Any time an asset's price fluctuates, some investors feel the pinch, but others profit because their investments help stabilize or boost inflation. The same principle applies to gold investment and gold prices. Gold prices are subject to market forces and are affected by government and central bank policies.
Before you decide to invest, it is necessary to determine what your gold investment options are. There are three basic options: shares, bullion, and gold bars. If you want to diversify your portfolio and increase the size of your investment, shares are your best choice. Shorter term options, such as gold bars, carry less risk than longer-term investments such as gold shares, and are also good choices if you want to maximize your profits.
A physical gold investment might seem safer, but be aware that there is always the risk of theft. The safest ways to safeguard your gold investments are with a safe vault or with insurance. Even with insurance, you will still need to investigate and monitor your assets to ensure that you receive the amount you have paid into your account. Because physical gold is difficult to steal, physical gold ETFs and gold bars are the least expensive option for securing your gold investment. Another advantage is that ETFs trade on major exchanges like the New York Stock Exchange (NYSE) and the Chicago Board of Trade (CBB).
For investors who prefer physical gold over an ETF or gold bar, there are many choices in this category. Certified coins are popular because of their historic and aesthetic value. Investors may purchase bullion coins and challenge others to inspect the coins for authenticity. These experts usually belong to professional organizations like the American Numismatic Association (ANA) or Professional Coin Grading Service (PCGS). Many bullion and coin dealers also offer certificates of authenticity along with their gold investment products.
When you make a decision to add gold gets to your portfolio, you are taking on additional risk because of the higher market risk associated with these products. As with any investment, it is important to know the pros and cons of using precious metals in your portfolio. Because gold investment products trade on major exchanges, they are subjected to intensive and long-term market risk. However, physical gold has low transaction costs and is a highly liquid investment.
Most investors choose gold investment products that allow them to diversify their holdings by owning ETFs or certificates, as well as a number of physical gold bars. The historical performance of gold funds has been excellent, but investors should consider the historical performance of individual gold bars over time before investing in a fund. Historical performance data can be obtained from several sources including the US Mint and the London Gold Fixing. Although historical ETFs and certificates of ownership are not available for purchases, most online brokers will provide price comparisons between holding periods for various ETFs or bars.
There are several reasons that an investor may choose to invest in gold investment funds instead of investing directly in physical gold bullion. These include high liquidity, higher return, and tax benefits. A gold investment fund is considered a tax-sheltered investment, which allows investors to enjoy tax advantages on dividends as well as capital gains and interest from short sales. Another advantage of having ETFs and certificates of ownership is that an investor does not have to pay stamp duty or sales tax when selling a gold stock.
No comments:
Post a Comment