What Is The Best Way To Make An Investment In The Gold Market? Buying Shares, Buying Physical Gold Or Buying ETF’s?
What’s the best way to buy gold and gain an exposure to the gold market? There are many ways to buy gold including buying physical gold, trading gold mining company shares or holding ETF’s. Which ever way you choose make sure you know the live gold price before you make a decision.
In this feature we are going to take a look at three popular options.
Buy Physical Gold Online
There are a few things you should consider when you by physical gold online. Firstly, you should consider the reputation of the company that you are planning to make a purchase from. The last thing you want to do is buy from a company with bad customer service or poor feedback from previous buyers. Your are recommended to do some research into the company before making a purchase. Have they any negative comments from previous buyers?
Secondly you should consider their shipping policy and details regarding lost items. It is important that if you buy gold from a company online that the package can be tracked; and that the package must also be signed for at delivery. This can prevent the mishap of a package being delivered to the wrong address and given to the wrong person. Any purchase online should also include insurance for the delivery, that is the best way to safeguard your purchase in case it is lost or damaged in transit.
A good way to buy gold online is through Ebay, that way you can see what previous customers have said about a seller. Ebay’s system of providing feedback on customer satisfaction can go some way to ease your mind when purchasing gold online. It’s always wise to check the scrap gold price before buying any gold from Ebay.
Buying Gold ETF’s
Gold ETFs are an exchange traded funds but with gold being the metal the trade is based on. They are a convenient way to gain an exposure to the gold market as they have an active number of buyers and sellers to retain liquidity. You will most likely have to pay an annual management fee for holding an ETF, normally less than 1%, but despite this, ETF’s are still an efficient way to buy and sell gold.
Investing In Mining Companies
This can be a good option but you also need to be aware of the risk. In theory if you buy shares in a gold mining company, if the gold price increases, the company will be more profitable and your shares will increase in value. Plus they may discover extra gold reserves and your shares to increase at a greater rate than buying physical gold. However there is a caveat to this, mining is not an exact science and is subject to the same fluctuations as a regular business. Management, geo-political risks, natural disasters and currency exchange prices are all need to be considered when buying shares in mining companies. Clearly you are exposing yourself to greater risk than buying an ETF in gold, but also potentially greater gains.
Comparing all three potential ways to buy gold is not simple and which method is right for you depends on your reason for buying gold in the first play. If you are risk adverse then ETF’s are safer than buying mining stocks. But it should be remembered, precious metals are volatile so any purchase is susceptible to greater daily fluctuations than holding your money in the bank.
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