Gold has been one of the most coveted precious metals starting in ancient times to early history and now, the 21st Century. Today, it is a trading commodity and popular among investors for investment opportunities and portfolio diversification. Before beginners dive into the gold market, they need to learn about investment options and their associated risks. Use this informative article as a basic educational guide on gold options, their value, volatility, and risks.
Types of Gold Options
- Jewelry is a collectible made of 24 karats pure gold hold or exceeds their original value.
- Gold Coins, Bullion, and Bars are an option for owning physical gold. An example of a reputable entity that sells gold bullion is the United States Mint.
- Exchange-traded Funds are firms that purchase gold for their shareholders.
- Gold ETFs are mining investments of gold miners.
- Future Contract is an indirect way to own gold, but highly risky for beginners and experienced investors.
- Mutual Funds are gold mining stocks.
- Gold Certificates are notes that companies issue to claim ownership of their gold.
- Mutual Funds are simply mining stocks traded on exchanges.
- Streaming and royalty companies provide capital to buy gold from mines at future reduced rates.
Demand and Value of Gold
The jewelry industry has the largest demand for gold, followed by investments and the dentistry, heat shield, and technology gadget business sectors. Approximately 50 percent of the demand is for jewelry and the demand for investments is 40 percent. Only 10 percent of the gold demand is for dentistry, heat shields, and tech gadgets.
Because the precious metal market is volatile, the prices of gold fluctuate. The value can increase over time or drop during a market crash or recession. Of all the investment options, jewelry has a lower value after the purchase. The reason is due to the high markups attached to the purchase price of gold jewelry and accessories.
Before investing in gold options and other investment products, beginners must educate themselves. Invest a small amount of money and gradually increase it up to 10 percent of a portfolio. Of all the strategies, stock in streaming royalty companies is the best option. Securities Exchange Commission (SEC) is a resourceful website to learn more about investment options for beginners.