Jumping Into the Gold Investment Market

Gold is a commodity that has been used throughout history as a medium of exchange. While it has been replaced as the primary means of exchange, it is still commonly used as a form of investment. One of the nice things about investing in gold is that you know it will always have some kind of value, even if financial markets struggle or collapse. If you’re interested in getting involved in the gold market, there are a few different ways that you could approach the process.

Buying Physical Gold

One way that you could choose to get involved in the gold market is to buy gold bullion. This could involve buying and holding gold bars or gold coins. When getting involved in this type of investment, you have to consider that liquidity of your investment. For example, if you decide to cash out your investment at some point, you’ll have to sell an entire piece. If you have a gold bar, selling gold can be difficult because it is worth so much for a single piece that the available buyers are limited. Holding smaller pieces usually works better because you have more potential buyers to work with. When holding physical gold, you also have to consider the safety of warehousing it and shipping it to a buyer. Finding gold buyers may not always be easy and you’ll need to figure out how to get paid while sending the gold to a buyer when you want to cash out.


Another way that some investors choose to get involved in the gold market is by buying shares of funds that focus on gold investment. For example, mutual funds and exchange traded funds are two options to consider when you want to get started with gold. Gold mutual funds usually focus on buying stocks of gold mining companies. By comparison, gold ETF’s actually buy gold for the portfolio. This makes the gold ETF more of a pure play on gold speculation. With the gold mutual fund, you are getting more of a leveraged investment on gold. This happens because when gold prices change, the profits of the company can change rapidly. The mining company’s costs stay roughly the same, but the profits can fluctuate drastically.

One of the advantages of investing in either one of these types of fund is that you can get started for a relatively low initial investment. By comparison, investing in gold bullion would require you to put up thousands of dollars all at once.

Futures and Option Contracts

If you wish to take a more direct approach to speculating on gold, buying futures and options contracts are other options to consider. With a futures contract, you agree to buy or sell a specific amount of gold on a certain date in the future. With an options contract, you get the option of buying or selling a contract by a date in the future, without being committed to it.

Regardless of which option you choose to pursue, getting started in gold makes sense. Despite the economic uncertainty in today’s world, gold has been performing well and is poised to do so in the future.

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