Of all the precious metals available, gold is perhaps the most widely traded as an investment. Most investors usually purchase gold as part of a diversified portfolio as a means of offsetting risk, particularly through the usage of derivatives and futures contracts. The gold market unfortunately is subject to substantial volatility and speculation, as are all other financial markets. The relative safekeeping of gold prices allows investors to reap significant profits without much risk.
Investing in gold is not for the faint of heart however, as markets can be very volatile and bearish at times. Volatility can make the small investor, even a large hedge fund investor, lose lots of money in a short period of time. Most investors who are looking to invest in gold should stick to investing in bars or coins. The appeal of gold as an investment is also somewhat limited by the likelihood of investing in bullion or coin collections being profitable. For this reason, investing in gold might prove to be a less effective method of diversification than investing in bullion coins.
One of the main benefits of investing in gold coins such as the American Eagle is its ease of storage. Gold bars can be stored in safety deposit boxes at banks or in the custody of a physical gold dealer, both of which have relatively low overhead. When investing in gold coins, the smaller, .25ct gold bar is a good choice. Coins in the smaller size have higher mintage, meaning the dealers have fewer shares to sell out and thus are able to pass on higher prices when they do choose to sell. Gold in the larger bars is harder to sell and therefore the value of the bar is slightly lower per ounce.
Investing in gold mining stocks is another option for those interested in diversifying their portfolio. Gold mining stocks can provide a steady return on your initial investment without requiring the same care of investment that you would take in purchasing gold bars. Gold mining stocks usually deal with underground mines around the world. This allows you to reap the benefits of a mine’s production without having to oversee every step of the process or monitor the quality of the gold used in the mining process itself.
Another type of investment strategy that offers similar protection against economic instability is gold mutual funds. Mutual funds can be an attractive option when investing in bullion and gold coins due to the high liquidity factor associated with gold. Because mutual funds pool assets together, large sums of money are possible to be invested in a relatively small number of shares. This allows smaller investments to have the same potential to yield a high rate of return as larger investments. This advantage is especially appealing to investors who are not always comfortable investing in large sums of money.
Although there are a number of different investment strategies available, gold coins remain an attractive way to invest in the future. By purchasing physical gold and holding it in an investor account, investors can be assured of an investment that is secured by the actual worth of their metals. They can also take advantage of price movements in the market for an increase in the value of their asset without the worry of buying and selling at a moment’s notice. For these reasons, gold coins remain a strong option for gold investors.