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The Different Types of Gold: An Investor’s Guide

types of gold

Are you thinking of diversifying your portfolio? Perhaps you want to hedge against inflation caused by economic downturns and market volatility. Or maybe you want an investment with high liquidity which doesn’t require much maintenance.

If so, consider investing in gold.

Investing in gold could be one of the best investment decisions you’ve ever made in your life as an investor. There are numerous benefits associated with a gold investment. These include being a safe-haven investment, maintaining its value, being secure compared to other assets, and more.

But do you know there exist different types of gold? If you’re thinking of investing in gold, it’s vital that you pick the right gold product. Read more to learn the different kinds of gold.

Physical Gold

One of the most common ways of investing in gold is buying it as a physical asset. You may consider purchasing gold in the form of jewelry, bullion, and coins.

If you decide to invest in physical gold, it’s important to be informed beforehand to avoid scams. Take time to familiarize yourself with various terms such as;

• troy ounces: a system used to measure the gold and other precious metals

• mint: a producer of products like silver coins and gold bullion

• sovereign mint: a mint that creates products that meet the nation’s standards for metal content and purity

• private mint: a mint that’s run privately and creates a product that meets its own standards

When purchasing physical gold, it’s also necessary to plan how you’ll secure and insure it. You can purchase a quality safe for your home or a safe deposit box are the most typical ways for storing gold.

Gold bullion

Many people regard gold bullion as the large, uniform physical gold bars kept in vast vaults. But in reality, gold bullion comes in any size or shape, whereas it meets the set purity threshold and is certified for its quality and weight. You can buy it in grams, kilograms, or even in higher units.

Gold bullion comes in two main forms including;

Bars: larger pieces of gold that are kept in possession of the investor or are purchased by big companies and organizations.

Coins: they are minted in different sizes and are stored in depositories or in physical possession of the investor.

As an investor, keep in mind that the price of gold determines the value of gold bullion at the time of purchase.

Gold Coins

Gold coins are very popular because they come in more manageable denominations than gold bars. Also, they can be easier to store securely and transport from one location to another.

If you want to invest in gold coins, you can often find deals at independent traders and pawn shops. However, there are dealers that have excessive mark-ups anywhere from 30% to 50%.  Choosing a reputable dealer is an important factor before you buy gold coins.

Gold Jewelry

Investing in gold jewelry instead of bars and coins is also an option. They appreciate in value while still serving their functions.

However, they come with more risks than gold bars and coins. That’s why they’re ideal for experienced gold investors who know how to mitigate the risks and secure their properties.

If you want to buy gold jewelry, you can find them at pawn shops or private stores. This way, you need to be careful because verifying the piece’s authenticity can be difficult. To avoid taking chances, buy your gold jewelry from a well known dealer and ask for documentation proving its originality.

Gold jewelry is more expensive than gold bullion bars and coins since its price factors in the manufacturing and designing costs. As the investor, you’ll get the gold jewelry at a higher price than the value of raw materials used to create it.

Gold Mining Stocks

If you decide to invest in gold mining stocks, you don’t invest directly in gold but in companies that mine it. That means you purchase shares of a gold mining company and not the actual gold.

Gold mining stocks are more speculative than other gold investments, so you should be careful when investing in them. They are ideal option for investors with broader risk tolerance in exchange for potential gains.

The value of gold mining stocks doesn’t necessarily rise in conjunction with gold prices. It’s subject to various factors such as;

• company’s performance and profitability

• environmental and economic risk of the company

• company’s reputation

For this reason, take the time to research more about the company and the stocks you want to invest in.

If you’ve friends, colleagues, or relatives who have invested in gold stocks, consult them. Also, you can use a stock screener to help you find the best gold mining companies to invest in.

Gold Options and Futures

These are investment derivatives that are short-term speculation on future gold prices. A gold futures contract obligates you to buy or sell your asset at a specific price on a particular date regardless of the market state. An options contract is similar but allows you to decide whether to buy or sell your asset if it reaches a particular price by a certain time.

The markets for these investments are more complex, and investors trade in speculation. For this reason, they are more suitable for sophisticated and experienced investors. Investors monitor their holdings to ensure they don’t expire and they trade them correctly.

These Are the Different Types of Gold

Gold investment is one of the most lucrative opportunities you can venture into. However, you should invest in the right gold product to gain higher returns from the investment.

Being a significant investment, you don’t have room for spurious decisions. Read the above types of gold investments and their features to select the best one.

Do you want to invest in gold? At CMI Gold & Silver, we can help you make a viable investment. As a gold and silver dealer, we guide investors to get precious metals that fits their investment goals.

Contact us today for any inquiries.

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