Today we shall take a look at how you can invest in gold and make money. The truth about investing is that there are no guarantees- every asset has a risk factor that the investor must consider. You may have already heard that gold is a safe haven in times of economic instability, but if you invest using the wrong approach, then you may not achieve profitability. If you want to find out the various ways in which you can invest in this rare shiny metal, then you should read on till the end of the article to find out more.
Investing in gold
In times of economic instability, the stock market is usually the hardest hit. Those who hold on to their stocks suffer great losses, more so if their portfolios are not diversified. There are, however, some investors who choose to minimize their losses by turning to gold during such times.
For many thousands of years, gold has been passed down from generation to generation, from civilization to civilization, and has eventually found its place in today’s world as a popular investment for conservative investors.
Unlike a couple of decades ago when the number of investable assets was limited, the present-day world has many options from which you can pick, but gold comes as a popular choice for those who are looking for safety, and to diversify their portfolios in a legit way.
Is purchasing gold a smart move?
The answer to this question entirely depends on who you ask. There are those who argue that precious metals are too risky to invest, while others argue that they are a must-have asset in a long-term investment portfolio.
The truth of the matter, as it has come up a couple of times, is that people rush to gold during tough times, owing to the fact that it has stood the test of time. The fact that gold holds its value even during periods of high inflation is a motivating factor for most investors.
Renowned investor Warren Buffett has for many years been ambivalent about precious metal investments, including gold. He is a bona fide investor who has managed to become an authority in the world of stocks investments, including his favorite Coca-Cola stocks.
Despite his views of gold, Mr. Buffett surprised many people by purchasing gold stocks in the globally recognized gold mining firm Barrick Gold, in 2020, through Berkshire Hathaway. He, however, disposed of all those stocks in 2021.
The fact that even Mr. Buffet thought that investing in gold is worth trying out is worth something to consider. Besides Warren Buffet’s case, there is more evidence for the viability of gold as a must-have asset in every long-term investors’ portfolio. Central banks in different countries in the world have been actively adding to their gold reserves in the recent past. It is no surprise that they have been doing this at a time when the U.S. has been hardest hit by inflation and the decline of the dollar.
How to make money investing in gold
When it comes to making money investing in gold, I think that there are several viable options worth trying out, though some depend on one’s level of expertise. Here are some of the top options worth considering:
Gold bullion (bars and coins)
Regardless of what your intentions for investing in gold are, you can always make some money through buying physical gold. To make a profit, you should purchase gold at a low price and hold it for a time when its price is considerably higher. Gold prices are, however, hard to predict (in the short term horizon), so should not invest all your money in gold.
In the 1990s, for instance, gold prices barely came close to $300 on a good day, but as of today, the prices range between $1500 -$2000. You can, as such, make gold part of your retirement plan today, by rolling some or all your current Individual Retirement Account funds to a gold IRA.
Investing in physical gold through gold will require you to reach out to a special custodian or broker, to help you get started, or you can simply reach out to the IRA experts in gold IRA companies to get started right away.
Gold mining stocks
This would be my second preferred method of investing in gold, but I would barely utilize it as an approach until the global economy shows signs of regaining long-term stability. Unforeseen events often make it hard for one to predict the stability of the economy, which is one factor to consider when investing in gold stocks. The price movements of gold stocks, like any other stocks, are affected by the status of the company that they are tied to. This means that you can make a killing if you pick the right company to purchase stocks from, but things can also go south pretty quick if you make the wrong choice.
In addition to that, gold stocks are also affected by economic instability, which makes them a not-so-good option, more so in cases where you would love to also diversify your retirement investment portfolio.
If you want to avoid the uncertainty that comes with investing in a specific company’s stocks, you can purchase gold Exchange Traded Funds (ETFs).
Gold ETFs are essentially pools of money collected from investors and poured into a variety of gold and mining firms. ETFs are usually traded like regular stocks. You can, for instance, purchase some of the most popular stocks such as GLD, GDX, and GDXJ through your broker.
When purchasing gold ETFs, you have to be ready to meet the fund’s expense ratio, which is usually charged as a percentage of your investment’s value each year.
ETFs, unlike stocks, are diversified, which minimizes the overall risk, but they are also subject to market fluctuations. If the stock market takes a blow, then your ETF portfolio will also be affected, even if the prices of gold do not decline.
Evidently, each of the above approaches to investing in gold has its pros and cons, and it is up to you to decide which one works best for you. You can, however, get started by taking a look at what the gold IRA companies recommended below have to offer.
That will be all for today’s article on how you can invest in gold and make money. With the knowledge of the options presented above, you can get started on the right foot, and make some money over your preferred investment horizon. Let me know whether you have any questions with regards to today’s topic – drop them in the comments section and I’ll get back to you ASAP!
I wish you success,
Eric, Investor and Team Member at Gold Retired!