The several ways of purchasing gold are each suited to a different style of investing. Physical gold can be purchased and held as a store of value or purchased and warehoused, for a fee, in a safe location. Gold can also be purchased through several different types of investment fund, which deal in gold and are tied to the value of gold but do not generally ever deliver physical gold to a buyer. Precious metals, including gold, are also traded on the futures market, and it is possible to purchase gold or to leverage its delivery, through this market.
The acquisition of physical gold is one of the oldest human strategies for amassing wealth. Many banks and dealers worldwide will sell gold, and reputable online gold sellers exist as well. It is generally a wise idea to investigate the legitimacy of a business claiming to sell gold, especially an online business, before purchasing. While most such firms are legitimate, scams do exist and can cost an investor a great deal of money either through inflated fees or through the sale of false or underweight gold products.
Gold is most often physically held in the form of bars or coins. Both are minted and sold by a wide variety of banks and other firms as well as nations. An investor looking to purchase gold as a commodity investment should purchase coins that are not rare enough to have additional value as collectible items. South African Krugerrands are one famous example of this sort of coin. Agencies selling gold often also offer warehousing services for gold and typically charge a small percentage of the gold’s value as a fee for holding it in a secure and insured location.
Investors who do not wish to purchase gold directly can acquire it through indirect investment instruments. Exchange-traded gold funds operate much like stocks, in that they are purchased and sold in shares. These funds hold assets in the form of gold, and an investor purchases a stake in gold by buying into a fund. The amount charged by a fund for storage and overhead is critical information, as funds with high expenses can rapidly drain the value of an investment.
A well-informed investor, willing to take on some additional risk, can purchase gold through gold futures. A futures contract essentially allows an investor to purchase a commodity at a later date. These contracts normally require that only a fairly small percentage of the final price be paid initially and are therefore a way to gain control over a great deal more gold for the same amount of money. As is always the case when buying with leverage, both potential profit and potential loss are greatly increased. Gold futures can be purchased through most commodity exchanges.
