Understanding Gold Investments – What are Your Options?

While most equate Precious Metals with Jewellery, they have more practical uses. For example, Gold investments are favoured as long-term profit prospects. The lure of Gold is timeless. The soft yellow metal with its unique warm lustre has been admired and coveted by humans for at least four and a half millennia.

However, in recent years, the demand for Jewellery has been dwindling. While this lucrative business still accounts for around half of all the Gold mined annually, this fascinating element has become a vital commodity in several more essential new industries.

In addition, Gold’s continuing tendency to increase in price has made it a magnet for investors. However, although purchasing the physical metal in the form of Bullion bars or coins is an obvious option, it is not the only one. Let’s examine all the possibilities and consider their pros and cons.

Comparing The Various Types of Gold Investments

Labelling a metal as precious indicates it’s rare. If you decide to invest in Precious Metals, there are several to choose from, some familiar, others less so. Among the less well-known are Palladium, Rhodium, Iridium and Osmium, and while Platinum is also an option, the performance of Gold and Silver prices has proved to be consistently more reliable. If you choose to invest in Gold, there are five main options as follows:

  1. Mining Shares: While being part-owner of a Gold mine may be appealing, it also holds risks. If the ore becomes exhausted or is of such poor quality that the cost of extraction and processing exceeds the spot price, your shares could become worthless overnight.
  • ETFs and Mutual Funds:  The two options are similar and less risky than investing directly in a single share as they offer a more diverse portfolio in which gains in one area could compensate for losses in another. On the downside, annual fees, commissions or expense ratios will limit your returns.
  • Futures and Options: An investor can commit to purchase a pre-agreed quantity of Gold at a future date or select the option to buy a futures contract within a pre-agreed timeframe. Either way, owning an option involves paying a premium on the underlying value of the Gold, a deterrent for some.
  • Jewellery: Although people seeking Gold investments will often turn to Jewellery, they overlook the high markup, which, on average, is between 200 and 500 per cent. While there is profit to be made, it could take many years just to recover the original purchase price.
  • Gold Bullion bars and coins: Owning physical Gold in the form of minted bars or Kruggerand Coins offers numerous advantages. For a start, they will never become valueless overnight. Instead, their value is determined by the spot price and accepted by dealers worldwide. More importantly, the Gold price has shown consistent gains, averaging $34,85 in 1967 and around $1,924 at the time of writing.

How to Invest In Gold Bullion

Mr. K provides a comprehensive portfolio of services relating to Precious Metals. These include the sale of Gold Krugerrands and minted Gold bars in-store and online. Please get in touch for more information about our quality products and confidential services.

DISCLAIMER: The information above was derived from reliable sources and deemed accurate at the time of writing. However, changes following publication may have affected its accuracy. Such changes may occur without notice, and Mr. K cannot be held liable for inaccuracies in this article’s content or how a reader may choose to interpret it.