There are a hand full of ways to invest in gold or in relation to gold. Each investment has a different strategy of utilizing the metal as an investment. These are the five main ways:
1. Gold Based Mutual Funds. A mutual fund is usually a large collection of individual stocks held collectively as one single investment instrument. Gold based mutual funds are mutual funds that invest in or carry stocks in mining companies that actually mine gold. Mutual funds cannot always be liquidated (converted to cash) almost immediately as an individual stock can.
2. Gold ETF’s (electronically traded funds). An ETF is actually investing in a set or group of stocks (a sort of minature, smaller mutual fund, if you will) that can be traded almost instantly like an individual stock. A gold ETF is an ETF based on companies that hold gold as their only asset. The USA currently has only two such companies which are truly all Gold ETF’s.
3. Junior Stocks. Investing in gold junior stocks is investing in companies that are looking for gold. The companies that are gold based junior stocks are businesses that seek or explore in search of gold.
4. Investing in Gold Futures. Futures are a speculative investment. Investing in a future is a bet on what the price of something will be for a certain time frame. Investing in futures uses select betting or investment processes such as “options” and “puts”. Investing in gold futures is simply betting on what the price of gold will be over a certain period of time. Basically, investing in gold (or any future) means if one guesses correctly on what the actual price of gold will be over a certain period of time profit is made. If the guess is incorrect money is lost on the investment.
5. The very safest of all gold investment techniques is “Direct Ownership”. This is actually having gold on hand in your possession, or securely stored for you. Our club recommends this type of investment before venturing into any of the other type of precious metal investing. Direct ownership such as a Gold IRA or Gold 401K retirement accounts are the safest of all gold investing protocols. This is sometimes called holding bullion. Some individuals buy official gold coins for this safer direct ownership approach opposed to other type of gold related investments. These individuals are some times referred to as gold hobbyists.
We recommend investing in solid gold for your retirement years. A few select accounts are designed exactly for that. These are known as Gold 401 K’s (or Gold IRA rollovers in which select assets are converted to solid gold). Certain organizations are used to service these investments. The firm will acquire the gold for your investment, ensure it’s integrity and safely store the gold for you while handling the necessary paperwork. This type of direct ownership has tax advantages which we discuss further in some of our other articles. The gold is held in safety and as the price of gold rises over time (which it will) your investment makes gains and will be worth more and more. A few of these companies will actually buy the gold back at some point in the future if you decide to cash in part or all of your investment (our club recommendation is Regal Assets LLC out of Burbank, California). We have performed a strong study on the “very best” companies that handle these type of hard metal investments. We looked into exactly how they set up your direct hard metal ownership and how that investment is handled. A quality organization should meet certain criteria. See our guideline in choosing a metals firm for these services: Our Ten Item Precious Metals Firm Checklist