More and more people are allocating part of their savings to investing in gold. If you are a person who has savings and you are thinking of making a profit, you should learn how to invest in gold ira companies.
The world economies are increasingly in debt, with uncertainties of all kinds, with political conflicts … etc. Anyone who knows a little about economics knows that all this leads to inflation rising.
Inflation makes money have less value, and leads to an impoverishment of citizens. Papers (bills), and metals (coins), have a tendency to lose value over time.
For this reason, large companies and professional investors invest in gold. A part of their investment portfolios are used for investing in gold. Today, anyone can buy gold, even in small quantities.
In this article I am going to teach you how to invest in gold. You have several alternatives. Read on and find out which one suits your needs.
Why invest in gold
Gold has always been a finite metal, rare, and coveted by man for many centuries. In society, what is limited and many people want it, is always something of great value. And in economics, high demand and low supply leads to upward pressure on prices.
If you are thinking about what to do with your savings, this is an option to consider. We are going to see two powerful reasons why buying gold for investment, or why investing in gold is a good alternative for any saver.
Gold as a safe haven
Owning gold means having an item that will always have value. Therefore, it is a way to keep your capital safe and it is called safe haven value.
Gold would protect you if in your country there was an economic catastrophe like the one you are suffering in Zimbabwe, or in Venezuela.
Rich countries are also at risk of a collapse in their economies. Recently, the last financial crisis that began in 2008 in the United States and Europe put the world economy in check and the GDP of the countries suffered considerably.
In those years, many investors, for fear of an economic catastrophe, bought gold and the prices of this metal soared. The price of gold went from 869 US $ in 2008 to 1,895 US $ in 2011.
Gold as a direct investment
In the past financial crisis, many investors wanted to benefit from the tremendous increases in the price of gold. In addition to buying it as a safe haven, they also bought it as a direct investment to take advantage of future price increases.
Today investors continue to buy gold because they see it as a valuable, finite metal with many industrial uses. Gold supply restrictions are believed to increase the value of this metal in the future.
Many governments, as well as wealthy people, have gold in their investment portfolios. This is a compelling reason why to invest in gold. If the world’s most powerful institutions and individuals include gold in their investment portfolios, it is for a reason. Gold is a safe haven whose price has upward pressure.
The advantages and disadvantages of investing in gold
Investing in gold is becoming more and more normal and widespread among private investors. It is another option available to anyone who wants to diversify their investment portfolio.
However, like any investment instrument, it has its pros and cons. I detail them here below.
ADVANTAGE
Let’s see in a list some of the main advantages that investing in gold offers us:
- It is relatively easy to buy and / or sell anywhere in the world
- You can always know the quality of the gold purchased
- Gold is a safe haven value that avoids political uncertainties and inflation
- For the retail investor, it is easy to store and store
- You can invest in gold in different ways as we will see later.
- By keeping the physical gold you will not pay taxes
DISADVANTAGES
As is always the case in the investment world, there are risks to investing in gold. It is profitable to invest in gold, but this instrument also has some disadvantages. Here I show you the clearest:
- Investing in physical gold in the very long term has very low returns
- Holding gold does not generate any type of income
- When you have a certain amount of gold, storing it safely becomes complicated
Ways to invest in gold
There are many ways to buy gold. Different avenues can be used to achieve the objective or reason for your investment. You should consider the options available to you in your market, the form of investment appropriate for you, and the level of advice you will need.
If you have decided to invest in gold, you should review the various investment products that are associated with this metal. Each of these investment products have different risk, profitability, liquidity, and commission profiles.
You can invest in physical gold, or through the financial markets. We are going to see the best ways to invest in gold.
Invest in physical gold
Investing in physical gold means buying this precious metal and saving it. It is a clear and transparent form of investment, since you will see and touch your asset whenever you want. If you want to invest in physical gold you have several options. Let’s see what they are.
Invest in gold jewelry
The fastest way to buy physical gold is a jewelry store. Although it is the simplest way it is the least profitable, it is the worst option to invest in gold. The value of your jewel will probably decrease considerably after you have bought it.
The gold that is usually bought in jewelers is 10 carats, when pure gold is 24 carats. Extremely expensive jewelry may retain its value, but more because it is a collector’s item than because of its gold content. So if you are wondering how to buy physical gold for investment, discard this option.
Buy gold bars, bars, or coins
So where to buy physical gold for investment? If you want to play it safe and straightforward, the best way to buy gold as an investment is by buying bullion, bars or coins. There are companies like the Anglo Far-East Bullion, or the Perth Mint Australia that offer the sale of gold bars to everyone.
You have to consider that the purchase of physical gold carries additional costs, such as shipping, storage, and security. You can invest in gold coins, which would need less money, or you can invest in gold bars, if you want to make a stronger investment.
Normally companies of this type that are dedicated to the sale of this precious metal to investors, usually offer you storage in a safe place in exchange for a monthly fee if you do not want to have the gold in your home. It is a good option if you want maximum security.
Also, there are many investors who like to have contact and control over the acquired gold, since being able to buy gold bars is a great satisfaction. Therefore, they choose to have it at home in safes, or in some hidden place.
Where to buy gold bars in Spain
In Spain there are various businesses specialized in the sale of gold to investors. I put a list of the most recognized:
SEMPSA JP: Spanish company that offers the purchase of gold and silver bars. They have the “Good Delivery” quality seal.
Dinoro: Their offices are in Bilbao. However, it sells gold and silver bullion and coins through the Internet
Degussa Spain: German company based in Madrid. Has offices all over Europe
Oro Express: Located in Madrid. Dedicated to distributing gold bars from Switzerland PAMP SA
CIODE: Also in Madrid. You can buy gold coins, and gold and silver bars.
Andorran Jewelry: They offer the purchase of gold and silver, bullion and coins, smelting of precious metals and studying gems.
IGR Spain: It is a Turkish company that sells investment bullion and without intermediaries.
Investing in gold through the financial markets
Another way to invest in gold is through the financial markets. If you choose this option, you will not have physical gold, but contracts where it is established that you have investments in financial instruments linked to gold. Let’s see options for this way of investing in gold.
Gold investment funds
Investment funds traded on financial markets became popular in the early 1990s. However, commodities traded on the stock market were not available until the early 2000s.
It was at this time that Gold Bullion Securities launched its investment fund based on gold and its price fluctuations. Shortly after, new investment funds associated with this metal began to appear.
With investment funds in gold, you will have the opportunity to invest in gold and protect yourself against economic inflation. You must be aware that investing in these types of funds does not allow you to physically own the gold. Technically you will be investing in this precious metal, but you will not own it. In addition, you will have management costs that the company that manages the fund will charge you
Some of the best gold investment funds of 2019 were:
- Schroder ISF Global Gold
- Franklin Gold & Precious Metals Fund
- Landolt Investment (LUX) SICAV – Gold
- Edmond de Rothschild Gold sphere
- DWS Invest Gold and Precious Metals Equities
Purchase of shares of mining companies to invest in gold
Another option available to you is to invest in the stock market in companies whose businesses revolve around the production and sale of gold. In general, they are companies that are dedicated to mining exploitation specialized in the extraction of gold, such as the American company Barrick Gold.
You can buy shares in these companies, but like funds, you will not physically own the gold. Having shares in a company makes you the owner of the company in the percentage of shares you have.
The price of the shares of this type of company tends to fluctuate following the changes in the price of the precious metal. Typically stocks will go up and down when gold does.
Invest in gold futures
One way to acquire physical gold is by investing in gold futures contracts. It is a highly leveraged and risky investment, not suitable for beginners.
A futures contract is an agreement between a buyer and a seller to exchange a specific amount of gold at a specific future date and price that is traded in the financial markets.
As the price of gold rises and falls, the value of the contract fluctuates, and the seller’s and buyer’s accounts adjust accordingly. Futures contracts are traded on exchanges, so you will need a Broker to offer you these services.
Futures contracts are bought with only a small fraction of the total cost of the contract. That is, you would only have to invest 20% of the total cost of the gold controlled by the contract. This creates leverage, which increases the potential gains and losses you can have.
Since contracts have specific expiration dates, if you hold a contract to the end, you would physically receive the gold. Futures contracts are a complex investment that can exponentially amplify profits and losses.
Official real time gold price
You will be able to see the graph of the gold to a view month, or six months, or a year… etc. You can change it and choose the temporality that best suits your needs.
Conclusion to invest in gold
It is recommended that your investment portfolio have a small part dedicated to this precious metal, to protect you from possible economic problems that may occur.
Whether you choose to simply invest in a couple of gold companies, or buy futures contracts, or hold gold bars, bars, or coins, do it wisely. Make sure you fully understand the type of investment you are making, and the associated risks.