Ways To Buy Gold

I’m am not endorsing investment in gold as a long term wealth building strategy. However, these days many people want to invest in gold because it can add to their overall diversification. There are many different ways to buy gold. At the very least gold investors should be using the most efficient investment vehicle for their gold!

One of the best ways to buy gold is to invest in the gold Exchange Traded Fund or ETF. The gold ETF trades under the ticker symbol GLD.  One of the worst ways to invest in gold is to buy physical bars or coins!

What happens when someone buys shares of GLD, is that they are getting a share of a company that buys and holds gold as an investment. The changes in the price of GLD are supposed to mimic the changes in the price of gold itself. This means that if the price of gold increases 2% than the price of GLD should also increase 2%. In general this one to one relationship holds true.

The advantage of buying GLD instead of buying a bar of gold is that GLD is highly liquid. This means that if an investor in GLD wants to sell there gold at any time, they can. An investor in a physical bar of gold will have to find someone to buy his or her gold. The transaction of selling physical gold usually takes place at a price that is more advantageous for the buyer than the seller.

Another reason why liquidity is so important for gold buyers, is that an investment in gold could turn out to be a bad investment. There are many smart investors that have a strong opinion of weather gold is overvalued or undervalued. If an investor buys gold in the thought that it is undervalued and he or she is wrong, that investor will want to sell their investment as fast as possible an at the best possible price. An ETF offers this advantage over physical gold.

Another one of the best ways to buy in gold is through investment in a gold miner. This means buying shares in a publicly traded company that mines gold as a business. The world supply of gold is increasing at about 2% per year. With such high demand and high prices, the suppliers (miners) of this 2% increase stand to profit.

Here is a list of some ticker symbols of large gold minors, this is by no means a complete list, and each of the companies that accompany these ticker symbols should be well researched before any investment. Now the list: (NEM, ABX, FCX, GG, AU, RGLD, VGZ, ALTO, AUY, GSS, NMC)

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The best way to invest in any of these companies or investments is through a discount broker. A discount broker that operates on the internet. E-Trade is probably the most well known. These discount brokers can offer the purchase or sale of an investment for less then 10 dollars, while a traditional broker will charge 50 or more dollars to make a trade. Some brokers, like Vanguard and iShares, will allow an individual to trade ETF’s for free as long as those ETF’s are held for a specified period of time, usually 30 days.

Overall an investment in gold can be risky. It is an extremely volatile asset that can trade sharply down or up given the markets attitude towards the metal on any particular day. To protect themselves, investors should buy highly liquid forms of gold with little or no upfront brokerage commission.