Today’s gold market is characterized by a wide range of investment tools with varying degrees of risk and purpose. Some investment instruments are made for investing over the long term, while others are made for short-term trading or speculation. But what is the best type of gold to buy? Read along to find out!
When deciding whether or not to invest in gold, investors ought to take into consideration the fundamental options listed below:
- Putting money into physical gold (gold certificates, bars, and jewelry);
- Investing in securities that are linked to gold (stocks, investment funds, and ETFs);
- Making investments in gold-linked derivative instruments like gold CFDs, options, and futures.
Investing in Gold Bars and Coins
When investing in physical gold, gold bars or coins are usually purchased. Basically, the larger the amount of gold purchased, the closer the price will be to the price of gold on the exchange, so from a purely financial point of view, it is more advantageous to buy larger gold bars.
In terms of weight, price, and liquidity, investment gold bars weighing 100 grams are the best choice and are the most popular among all investors, so you need to carefully look for getting the lowest price per ounce.
For greater safety, each gold bar is marked with a unique serial number of the manufacturer, certified, and packaged in an airtight package. When buying gold bars, choosing only certified products from reputable manufacturers is recommended.
Investing in Physical Gold
For beginners, purchasing physical gold is probably the easiest and simplest way to invest in gold. You can also try CFD trading – for example, if you expect the price of gold to increase, you may want to open a position with a CFD on gold. But this will be a bit complicated for the novice investor.
Investment gold bars and coins are the most frequently purchased physical gold investments.
You can also buy gold certificates, entrusting a gold trading company with the safety of your investment. Jewelry can sometimes be a good alternative to gold coins and bullion.
Typically, investing in physical gold is regarded as a long-term investment lasting between five and ten years. When purchasing gold, it is critical to only deal with reputable dealers because counterfeit goods may be available.
Futures are derivative instruments in which the buyer agrees to buy an asset from the seller at a predetermined price. That has something in common with stock trading. However, futures have an expiration date when the contracts are settled. The futures rate follows the dynamics of gold on the world market.
On the LME
The London Metal Exchange (LME) is an exchange where options and futures contracts are traded. The underlying assets are precious (gold) and industrial metals (copper, aluminum, zinc, nickel, etc.).
The exchange owns the storage of non-ferrous metals located worldwide. It occupies three-quarters of the global market of metal futures. The size of one futures contract is 100 troy ounces. The minimum price step is 10 cents per 1 oz.
Final Words: What is the Best Type of Gold to Buy?
If an investor has such a request, selecting the most efficient method of investing in gold individually for each situation is necessary. Because every investor has a unique set of needs and opportunities, there is no one strategy that works for everyone.