How to Invest in Gold Without Storing It
Gold can serve as a valuable safeguard, yet storing physical bullion is expensive and potentially risky should anyone discover your hidden stash and steal its precious contents.
Mining stocks offer an economical solution to capitalise on price fluctuations without incurring extra storage or vendor costs. Get your free Gold Investor Kit now!
Exchange Traded Commodities
Gold has long been revered as an investment asset. Unfortunately, purchasing physical gold can be time consuming and costly due to shipping, insurance and storage fees that reduce returns.
Gold bullion purchases may be an attractive investment option, but you must locate and secure an reputable bullion bank and pay security costs as well as worry about theft.
Bullion exchange-traded funds (ETFs), or mutual and exchange-traded funds that hold physical gold, offer another form of investing. Their advantage over physical bullion lies in not incurring storage and shipping fees associated with storage; however, management fees still must be paid and they won’t pay you interest or dividends; instead they aim to increase in value over time but may incur losses as with all investments.
Mining Stocks
Mining stocks provide a convenient way to profit from gold without possessing physical metal itself. They may consist of gold mining groups as well as companies involved with related commodities.
Search for mining companies with longstanding reserves. Also be sure that they operate from multiple countries so they won’t become dependent on economic stability in one area alone.
Investors typically divide mining stocks into two groups – major and junior. Junior stocks tend to have market caps under $1 billion and cover everything from exploration through development and production; their risks tend to be greater but may offer significant upside potential. Major mining stocks tend to be further along in their life cycles and may present less of an investment risk/reward ratio.
Gold Futures
Physical gold investments such as coins and bullion bars offer another means of investing in precious metals, but can be costly and time consuming – with additional costs associated with storage and insurance premiums over time.
Option 2 is purchasing futures contracts on the gold market. These legally-binding contracts obligate buyers to purchase and deliver gold on an agreed upon date in the future, known as the settlement day.
Be wary, however; futures trading is highly volatile and you could quickly lose money should prices fall rapidly. Furthermore, futures trading requires you to maintain an amount of money called “margin” in your account at all times or else your broker will close out your position and close you out from trading altogether.
Gold ETFs
Gold ETFs offer an alternative method for accessing the price of gold without owning physical bullion. Gold ETFs may either be physically-backed or track its price by holding shares in public companies that mine gold. Although more volatile than owning physical bullion, make sure your financial goals and risk tolerance match those before proceeding with such investments.
These investments are traded on the stock market, so their prices can change throughout the trading day just like stocks. Unlike physical gold which requires extra storage fees and security measures, ETFs allow investors to easily buy and sell them with little hassle or security risk. Just remember there will be costs involved with owning and managing these funds; take this into consideration along with potential taxes when making decisions like this one.
Gold Derivatives
Exchange traded commodities and investment trusts that track gold’s price are an ideal way to gain exposure without owning physical coins or bars, unlike physical bullion which is tied directly to one particular mining company that owns it. ETCs also allow leverage – known as gearing – which allows investors to buy more gold if the price rises than what was invested, something not possible with physical bullion purchases.
Although owning physical gold can provide an effective store of value, its ownership requires additional storage costs and vendor fees that should be carefully considered before investing in gold-based savings plans, certificates or futures contracts as potential alternatives to physical gold ownership.
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