For those looking to invest in gold there are several different methods by which to do so. The gold price is generally going to be the same across the board, though it can fluctuate slightly if cultural value, artistic appeal, purity or market speculation come into play.
Once you decide to buy gold, your investment will come in one of the following four forms:
The value of gold bullion is determined almost entirely by the market price of gold at the time of purchase. Gold bullion comes in one of the following two forms:
- Bars: These are larger pieces of gold that are generally not kept in the physical possession of the investor, and are usually purchased by larger companies and organizations as opposed to individuals. There are several variations of smaller sized bars that are kept in by individuals in their possession.
- Coins: Gold coins are minted in several different one ounce forms ranging from 1/10 oz. to 1 kilo; though one ounce coins are by far the most popular amongst small company and individual investors. Coins are kept either in possession of the investor or in depositories.
JEWELRY AND NUMISMATIC COINS WITH ARTISTIC VALUE
In addition to being made of gold, jewelry and numismatic coins are purchased for both their gold value and their cultural, historical or aesthetic appeal. In a bull market this means that the value of these items will typically increase faster and often surpass the market price of gold. In a bear market the opposite is true and the same items will tend to decrease at a faster rate than their bullion counterparts.
GOLD MINING STOCKS
When you purchase gold stocks you’re not actually buying gold, but instead are purchasing a share in a gold mining company. This means that the share prices don’t necessarily rise in conjunction with gold prices and are subject to a number of other factors, including; performance of company management, auditors and geologists as well as the cost basis and the environmental and economic risk of the company.
Gold Exchange Traded Funds (ETF) are products (also called Closed End Funds and Exchange Traded Notes) that aim to track the price of gold and are traded on major stock exchanges. Each Gold, ETF, CEF and ETN is setup and structured differently. Also not all of them are backed by physical gold, like gold ETNs which use derivatives to track the price of gold.