Tuesday, January 4, 2011

How to invest in Gold?

1st way to invest in Gold - Gold Bullion Bars and Coins
Investor can buy physical gold bars in different weights ranging from 1 gram to the popular kilobar (32.15 troy ounces), or to the international “London Good Delivery” bar (400 troy ounces). Gold coins are legal tender in the country of issuance and their gold content is guarantee.

The bullion coin bears a face value that is largely symbolic. Its true value depends on its gold content and its numismatic value (or collector’s value). One disadvantage of buying physical gold is that you would have to pay some sales tax or administration fees for bank’s safekeeping.

2nd way to invest in Gold - Gold Certificates
For investor who does not want to hold physical gold, invest in gold certificates is another alternative especially for those who want to invest gold in large amount of money. The investment in gold certificates is usually one kilobar each, up to a maximum of 30 kilobars. There is no sales tax on gold certificates. Gold certificates can easily be exchanged for physical gold or cash. The gold is kept in the bank’s vault, and may incur some administration charges.

3rd way to invest in Gold - Gold Savings Account
Investors can buy and sell gold through a passbook at prevailing market prices. Gold savings accounts allow those gold investors who want to trade frequently to buy and sell gold in a unit of 1gram lots.

4th way to invest in Gold - Gold Mining Shares
Investors who have a greater investment risk appetite can choose to invest in the gold market by buying stocks in gold mining firms. The capital appreciation potential of a gold share is depend on the future price of the gold, and also on the future prospects of the company, based on its management and operating strengths. Where these companies make the most is exploration, but that is also where one finds the higher risks.

Some of the most established gold mining companies in the world are found on the New York Stock Exchange, NYSE. Barrick Gold Corporation is the largest gold producer company in the world, followed by the world's second-biggest miner Newmont Mining Corporation.

5th way to invest in Gold - Gold Unit Trusts and ETFs
Investors who invest in gold unit trust are buying general industry and market risk instead of company-specific risk. Gold funds diversify their holding among dozens of companies. An example of a gold unit trust fund portfolio consists of about one-third of the fund is typically in base metals such as iron, ore and copper, and about two-thirds are in gold and precious metals.

Another way to invest in gold is through the streetTRACKS Gold Trust (Symbol: GLD), where investor’s ETF (Exchange Traded Funds) shares can be bought and sold at anytime. The ETF is benchmarked to spot gold, which means that it is as good as buying physical gold, minus the fund’s expenses, and the transaction cost involved is lower than the cost of buying and safekeeping physical gold.

6th way to invest in Gold - Gold Derivatives
Gold futures and options are traded on established exchanges around the world. At COMEX (New York Commodity Exchange, the leading U.S. exchange for metals futures and options trading), for example, each gold futures contract is for 100 troy ounces of not less than 0.995 fineness, and bears a serial number and the identifying stamp of a refiner approved and listed by the Exchange.

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