Gold is quickly becoming a mainstream asset in a diversified portfolio. In the past, many investors eschewed gold, preferring instead a mixture of stocks, bonds, and equities, potentially including alternatives like real estate. However, as the Financial Times points out, equities and bonds have been moving in conjunction, and assets that rise together are likely to fall together. Interest rates have also been kept low since the recovery from the 2008 financial crisis, which has hurt yields. At the same time, banks in Europe and Japan are buying bonds at such high prices that yields are negative in some cases. Under these conditions, investors are becoming less concerned about the fact that gold doesn’t generate income, dividends, or rent. They’re looking for an asset haven and gold fits the bill. More investors are using gold to diversify their assets, but there are several different ways to invest in gold.
#1 Gold Bullion – Physical gold bullion is one of the most popular ways to buy gold. Investors buy gold bars or gold coins online from gold dealers like Silver Gold Bull and either have it shipped to their home, store it at the bank, or store it in allocated storage (where your gold is stored separately and you withdraw the exact gold bar you put into storage). It’s low-risk and reliable.
#2 Gold ETFs – A gold ETF (exchange-traded fund) is a controversial option. Some investors say there’s no reason to own a gold ETF, others argue that it’s the only way to own gold, and some encourage a 50-50 split. A gold ETF relieves you of storage costs, but as with any investment, there will be fees. A gold ETF is a mutual fund that invests in a bullion and mining companies.
#3 Gold Mining Shares – Another alternative for investing in gold is gold mining shares, but these come with more risks than buying gold bullion. Gold mining shares are exposed to the price of gold but it’s not the only factor. When you invest in gold mining shares, you take on more third-party risk. As with any investment in shares, you’re betting on the management and operational risks of the company, not to mention geopolitical uncertainty in the countries where the company operates.
#4 Trading Bitcoin for Gold – Gold dealers like Silver Gold Bull now accept Bitcoin for gold bars and gold coins. Buying with Bitcoin allows you to trade out of a volatile investment and into a stable one.
There are plenty of new ways to buy gold to explore, but if you’ve already factored in storage costs, holding gold bars comes with minimal risk. In the end, it’s often a matter of balancing costs with risks. Since gold is meant to be an extremely low-risk investment, consider buying physical gold bullion or a mix of options to minimize the third-party risks of gold ETFs and mining shares. Start investing in gold to reduce the risks in your portfolio and beat the low interest, low yield environment.
