Gold is no doubt one of the most interesting markets to invest in because of the many different ways. The most important thing to know about gold is that is always has value - gold has never gone to zero! Yet, every single fiat paper currency in existence has gone to zero. Every one. Gold is a great hedge against inflation and protection against political and social instability. Plus, the stuff is really cool and shiny! Today, investing in gold (and silver) is the easiest it's ever been. Here are a couple of ways to invest in the metal:
- Buy the Physical - Coins, Bars, etc. This is probably the most popular way to invest because it is the easiest. All you have to do is either go to a local coin shop or buy it online. I prefer the website APMEX.com, and Amazon has some links to good deals. You can store your coins and bars at home in a safe or at a local bank. When you are ready to sell, just head on down to a coin shop/jewelry, or sell it online back to the dealer. It is a very liquid and safe investment.
- Buy the stocks - I am a big fan of precious metals stocks - the companies that produce the metal. I like them because of obvious reasons - I believe gold is going higher from here. Therefore the companies that mine the metal are seeing there margins increase at record levels. The one thing people have against physical gold is that it "does not pay dividends." However, stocks such as Franco - Nevada (FNV) and others DO pay a dividend. Another stock I like is Sandstorm Gold, which doesn't pay a dividend but may do so in the future. The stocks are my favorite way to invest in the sector because of the leverage they offer over the physical, but keep in mind the risks involved.
- Futures, Options, Etc. - I do not recommend investing in gold/silver futures and options. Here you are introducing a lot more risk. Just recently, a lot of people that had accounts at MF Global lost their money! If you do choose this way, just be safe and do your Due Dilligence.
- Buy an ETF or Mutual Fund - I recommend the Tocqueville Gold Fund (Quote: TGLDX). This could be your preferred method if you have a 401K or an IRA account.
- Buy or hold onto jewelry - This is a no-brainer! Do NOT sell your gold and silver jewelry. The pawn shops want your gold for a reason. The price of gold is expected to go MUCH higher from here. Hold onto your jewelry and sell it when gold is much higher in a couple of years. Amazon has some nice stuff.
These are the basic ways you can get started investing in gold and silver. Remember to always read up and avoid scams. You must be smart.
The spot price of gold is currently around $1700 and silver $32. The physical you are buying should not be selling a premium much higher than this. For gold, a premium of about $100-$250 is normal, while silver premiums typically run $2 to $8. But remember, when you sell, you will most likely get that premium back from a dealer.