Last Updated on Apr 8, 2020 by James W
If you search the internet, you will find resources that offer impartial advice on the security of investing in gold. There are many different arguments that you will need to listen to, but most importantly, if you are thinking of diversifying your investment portfolio in gold, you will have to decide which type you will invest it, as there is more than one option open to you.
The Different Types Of Gold Investment
There are four primary vehicles that you can use to invest in gold, and the security of each of these can vary quite drastically. The four main types are as follows;
- Coins & Jewellery
- Gold Mining Stocks
- Gold ETFS (Exchange Traded Funds)
The one that most people think of is investing in gold bullion, as we have all seen images of the bars of gold. As well as this, you can also invest in gold coins and jewellery, although you often find that with jewellery you pay a lot more than the actual worth of the precious materials used to make it. Gold mining stocks are an investment with a particular gold mining company where you buy their stock, and hopefully, the company makes a profit. Gold ETFS track the price of gold on the stock exchange, but they are not always backed up by physical gold, the profits can be excellent, but the risks are also high.
The Drawback To Investing
There are different benefits and drawbacks to each, such as investing in bullion, coins or jewellery, will also require adequate insurance as well as storage facilities. However, it is easy to liquidate your assets should you wish to do so at short notice. If you want to purchase gold bullion in Melbourne or anywhere else in Australia, you must first make sure that you have somewhere safe to store it, or the risk to your investment could increase exponentially. A drawback to gold mining stock is that the price of the stock does not directly reflect the cost of gold, so a sudden surge in the price of gold may not have a massive effect on the value of your investment. You find that a lot of the Exchange Traded Funds, are not backed by physical gold, so if the exchange collapses you could be left with very little at all.
A Long Term Investment
If you invest in physical gold, whether it be bullion, jewellery, or coins, if you have somewhere safe and inexpensive to store it, and are prepared to play the long game, it can be a safe investment. History has shown that gold is an excellent hedge against inflation, as long as the cost of storage does not eat away any profits that you make. Invest in physical gold, as this is the safest form of gold investment, and store it away somewhere and forget about it. You could be quite surprised at the value of your gold when you come back to it in ten years time!