Can gold be used as an alternative investment? The answer is of course YES. Gold is also one of the most traded commodities in global markets. Gold is one of the rarest natural resources on Earth and, throughout history, it has been a desired metal since it is almost indestructible and doesn’t easily corrode.
Gold has played a significant role in most financial systems worldwide and even now, central banks are holding substantial gold reserves, despite the fact that none of the major economies has a gold standard. In recent years, the price of gold has surged as the financial crisis that hit the United States (US) and most countries of the European Union affected investors’ confidence. Gold is considered a “safe-haven” in times of economic downturn and an increase in its value is expected since people use it for hedging purposes. You may wonder how can you invest in gold? Check out some of the most common ways below.
An ounce of gold worth $600 in the morning could be worth $650 in the evening. Exchange-traded funds are a relatively new way of profiting from market fluctuations as they buy a spread on the investment rather than the investment itself. This means that an investor owns the net gold price transition interest, profiting as others buy the product. For those with little investment experience, it may seem a little daunting, but it is a good safeguard if your investments rely heavily on the US Dollar or some of the other major currencies.
A gold account carries in one of several different ways the value of your investment at a bank. An allocated account buys gold and then stores the metal in a safe place. Once you determine you are ready to sell your metal, the bank gives you the gold value of the investments. The risks of an allocated account are lower since the gold doesn’t go anywhere since it’s not invested but the rewards of an unallocated account are higher as it isn’t related to the value of gold itself.
Consumers enjoy buying bullion in the form of gold bars— as the government does, you can buy gold in bar form. Bullion bars, known as pure (99.5%), can be bought at their gold concentration per ounce value. The downside of buying a bar of gold is the purchasing cost: a smaller amount, like an ingot or a coin, brings a higher mark-up from the spot price, which is the metal’s current physical market price. Bullion can also be purchased in the form of a coin. Several different countries make their own coins for bullions. The American Eagle is the most famous from the United States.
These are some of the most common ways to invest in gold. Investors who intend to diversify their investment portfolios usually buy gold to safeguard their money in case of a sudden economic downturn. Gold has proven to be resistant in terms of price movements in difficult times for the global economy so if you are seeking alternative ways of investing, start doing some research on this precious metal.