The Best Types of Gold to Invest In: An Investor’s Guide

Investing isn’t limited to physical gold, such as gold bullion and gold coins. There are multiple investment strategies, including gold jewelry, gold stocks, buying shares of gold mining companies, gold ETFs, gold mutual funds, options contracts, and futures contracts.

Physical Gold

One method to invest in gold metal is through the physical method, which is the purest state of the metal. Simply put, it’s the form that can be held. It comes in different forms, and each has its own prices. Among the common types are gold bullion, gold coins, and gold jewelry.

Gold Bullion

This form of gold is the bulk form of the precious metal. It’s about 99.5 percent pure gold and comes as ingots and gold bars. Many prefer to purchase gold bars, but it presents an inconvenience. The problem with gold in this state is the hassle to insure and store it. A physical gold bullion bar is more prone to theft.

Gold Coins

Gold bullion investment coins are another type of solid gold. They are much smaller, more available, and better manageable than gold bars. An example of a gold coin is the Canadian Maple Leaf. To sell gold in this state is more convenient, as it can be sold in portions, unlike a gold bar that has to be sold in its entirety. It’s also easier to find a market to buy gold coins.

Gold Jewelry

Gold jewelry, another way to invest in gold (indirectly), is a common method. Buying jewelry is considered an everyday norm. Therefore, few consider or ever realize that this is a type of investment in gold.

Purchasing gold in this state is easier to manage than physical gold bars. However, this physical asset presents more risk than its alternatives, bullions, and coins. It’s more expensive than coins and bars because of the manufacturing process to turn gold into jewelry.

While it’s an easy method for beginning investors, the resale value may be less than what it was purchased for. Additionally, the authenticity of jewelry can be harder to prove. Owning physical gold in this state doesn’t offer the benefit of high liquidity, as its counterparts do.

Gold Stocks

Another way to invest in gold is through gold mining stocks. This is an indirect way to invest in gold because an investor doesn’t buy gold but invests in a gold mining company or gold streaming and royalty companies. Gold mining companies are among the business entities that profit from rising gold prices.

Gold miners have the advantage of global gold production. Therefore, they have a high chance of success as far as gold investments go. Gold companies gain regardless of declining gold prices. Investing in gold stocks will yield a profit without the risk that comes with purchasing physical gold.

Gold ETFs and Mutual Funds

Many investors choose the investment strategy of mutual funds and gold ETFs (exchange-traded funds). These are accounts responsible for buying gold on the investor’s behalf. The shares of these mutual funds and ETF accounts define a fixed amount of gold, which can be bought like stocks.

The difference between ETFs and mutual funds is ETFs mostly invest in buying physical gold. Mutual funds prefer to buy gold mining stocks. Since investors can work with gold without direct exposure to the metal, this is one of the best investment methods.

Of course, fees are attached to using these accounts, but they are typically lower compared to other investment methods.

Gold Futures and Options

A gold futures contract and options contract are short-term predictions of the future price of gold. The gold futures contract holds an investor under obligation to buy or sell their gold at a certain price at some point, despite the current gold price.

Moreover, the options contract is like the futures contract, except it allows the investor to decide to sell or buy assets if it reaches a certain price by a specific date. These markets are more intricate, so the method is recommended for more experienced investors.

There’s a downside to these investment methods. Both contracts are unstable. They’re more complicated to break into and control when compared to other types of gold investments.