Investing in gold for beginners: Step by step guide
Q: I’m a beginner to gold investing, should I buy physical gold coins and bullion, gold ETF’s or gold mining stocks?
How you choose to invest in gold should ultimately be a reflection of your goals. This article will help give you a basic understanding of the three mains ways in which you can invest in gold, and will help you answer questions typical to first-time investors in gold.
Physical gold – gold coins and gold bullion bars
Physical gold ownership is the preferred form of gold allocation for investors looking to hedge economic uncertainty and to utilize gold as a safe-haven, protective measure within their portfolio. Those concerned with economic disruptions, systemic risk, dollar devaluation, and an ever-growing government debt typically prefer outright, physical gold ownership in their personal possession Physical gold coins and gold bars track the spot price of gold directly, are easily liquidated when needed, and are only forms of gold ownership that are completely unencumbered and free from counter-party risk.
Gold ETF’s – exchange-traded funds
Gold ETFs (i.e. gld) are the preferred form of gold allocation for investors looking to trade gold as a short-term speculation. As a paper-traded product, ETF’s can be bought and sold instantly at narrow spreads. For investors looking to ‘get in and out’ of gold and trade small moves in the gold price, they’re ideal. For asset-preservation minded investors, ETF’s are not without their pitfalls though (pitfalls article), as they offer no rights to the ownership of actual physical gold, are costly over the long term (due to fund management fees), and, as purely ‘paper products’, carry inherent counter-party risk.
Gold mining stocks – gold mining companies
Shares in gold mining companies are highly speculative and are therefore the preferred form of gold allocation for aggressive investors looking for leveraged exposure to the spot price of gold. When gold is performing well, mining shares have the potential to move in multiples of the underlying spot price. But with increased opportunity for greater reward comes a greater risk of loss. Mining companies face numerous potential pitfalls to performance outside of the movement of the spot price of gold – including environmental, jurisdictional (shutdowns and government seizures), employee-related (strikes), internal management (corporate efficiency), and the broader stock market itself. So while they often trend with the underlying price of gold, any one of a number of factors can influence an individual company’s performance, making your specific choice of where you invest of paramount importance.
Summary Q&A
What is the safest way to invest in gold?
The safest way to invest in gold is physical gold coins and gold bullion.
Which form of gold is the best investment?
The answer to this depends on your goals. There isn’t an automatic ‘best form of gold for investment’ but rather the best form of gold investment for you – for your investment goals and what you want to accomplish specifically. Best for safety/hedge/protection?: Physical Gold Coins and Bullion. Best for short term speculation on the spot price of gold?: Gold ETFs Best for highly speculative risk-takers looking for expanded risk/reward?: Gold Mining Stocks
How do I get started investing in gold?
USAGOLD is a full-service physical precious metals dealer that advocates for gold and silver ownership primarily as a store of value and for asset-preservation purposes. Put our nearly 50 years’ experience to work for you! We are happy to review your goals, discuss productive options, assist with the ordering process, and answer any questions you might have.
A word on USAGOLD – USAGOLD ranks among the most reputable gold companies in the United States. Founded in the 1970s and still family-owned, it is one of the oldest and most respected names in the gold industry. USAGOLD has always attracted a certain type of investor – one looking for a high degree of reliability and market insight coupled with a professional client (rather than customer) approach to precious metals ownership. We are large enough to provide the advantages of scale, but not so large that we do not have time for you. (We invite your visit to the Better Business Bureau website to review our five-star, zero-complaint record. The report includes a large number of verified customer reviews.)
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