Gold being one of the most precious metals in the world has attracted investment professionals, novices and even institutions for as long as one can remember. Owing to its value not only has investing in gold been a great medium of exchange it has also been a great medium for individuals to store wealth, protect themselves against currency fluctuations and also as a safeguard against geopolitical risks.
An investor would be hard-pressed to find an investment market with as much appeal as the Gold / Bullion market has. In today’s complex investment market there are numerous way in which an investor can invest in gold. Some of the more common forms of bullion investment have been listed below.
Investing In Physical Gold
It could be said that every well diversified investment portfolio should hold a bit of physical gold in it. This is a great way to diversify an investment portfolio owing to the fact that it has universal appeal and every major bank in the world holds gold in it’s reserves. While it is not a gold investment in the literal sense of the term, it can be regarded as a hedge against various foreseeable and unforeseeable market and other risks.
Investing In Gold Bullion
These gold investment options allow investors the opportunity to own investment grade gold/bullion at a slight premium in comparison to the spot price as quoted on the market. Owing to the cost of insured delivery and security implications, larger bars of gold are not taken delivery of and are usually held by banks and large institutional investors.
Investing In Gold Certificates
This is another good way for investing in gold. The only government backed precious metal certificate in the world is the PMC (Perth Mint Certificate) program. With the PMC, investors can own bullion in either allocated or unallocated accounts. The PMC is rated AAA by S&P and is considered the safest way to invest in gold and own Gold bullion.
Investing In E-Gold
This form of gold investment is also known as Digital Gold Currency. Owing to the fact that this type of investing in gold is an emerging sector, there are fears that there might be certain scam artists operating in the field. Since the issuers of these certificates are not banks, they do not need to comply with strict banking regulations. However in the recent past Goldmoney.com and Bulliotrust.com have gather a lot of consumer confidence among those interested in investing in gold.
Allocated Accounts For Gold Investing
Allocated accounts allow investors to buy gold from certified bullion brokerages as a form of gold investment. These brokerages in turn, after the purchase of bullion has been completed transfer the gold to the individual’s depository account which is usually held in a bank. The owner has title to the specific gold held within the depository account. When investing in gold, it is recommended that investors should conduct adequate research and due diligence on the providers of these allocated accounts.
Derivatives For Gold Investing
Gold because of its versatility and value is heavily traded on the secondary market. Investors can make a gold investment by purchasing gold derivatives such as futures, forwards, options etc, either over-the-counter (OTC) or directly in private markets. For those interested in investing in gold derivatives, futures are primarily traded in the US on the New York Commodities Exchange. In the year 2006 India released a 100 gram gold futures as well.
Although the above mentioned forms of investing in gold are not exhaustive, they give consumers a fair idea as to what forms of bullion and gold investing are available in the gold investment markets. It is however advisable that as with any investment, consumers should carry out adequate research and seek professional advice prior to investing in gold.
References:
- A beginner’s guide to investing in gold – Money Week