Different Ways to Invest in Gold, Gold Market Investing Options

Friday, May 9, 2008

Different Ways to Invest in Gold

Gold is considered as the major hedging investment against inflation and economic crisis. The price of gold is some what steady compared to other investment options. There are many different options available for investing in gold.

Gold bullion: involves investing in certified gold bars and gold coins. This is somewhat costly option which includes the direct ownership of the commodity; and thus includes storage and insurance costs. The price volatility of gold and dollar can cause positive or negative impacts.
Gold jewelry: this is a more costly option from an investment point of view as you are buying product which is far more priced than the underlying gold value. But is a good option if gold price is expected to rise considerably in future.
Gold based ETF and Mutual funds: cheaper option compared to first two and one does not need too much investing knowledge or research. No direct ownership required. But the fund allocation of mutual funds and ETFs may differ and thus investors should choose the one right for them.
Futures on Gold and Options: For those having trading experience, gold futures are the most cost effective method to invest in gold. Because of low commission and margin requirements investors can control large sized contracts for small amounts. Options on gold futures are also a good option as they limit risks.
Stocks of gold mining companies: this is one another indirect way of profiting from gold. But there are risks of holding equities and one should do proper research and analysis before owning a companies stock.