Monday, 9 August 2010

Investment Options In Gold.

Gold is a precious metal which is brighter than its color. The demand of gold never satisfies by its supply. So the price of gold go upwards day after day. Most religions and races value its preciousness and some particular season the demand of gold become high and there is a steep hike in the price. Besides this situation we can see a steady increase in the price of gold. So it is a good investment option which has not much risk when compared to stocks and mutual funds. Investors consider gold is a better investment option than that of a metal which increases the beauty of the person it wears. Let us see the alternatives in god as an investment.

Gold Ornaments. Gold ornaments also can be considered as an investment. But for mere investment purpose it is not good. It is suitable for wearing as an ornament. For investment purpose gold ornaments may be devalued by its make and also by the purity. For making ornaments gold will be mixed with some other metals such as copper and silver. This will reduce the original value of gold and different traders value it in different ways. So it is not advisable to keep gold ornaments as investment.

Gold coins. Gold coins are used as legal tender money in some places and it has its own value other than its gold content. But for investment purpose also gold can keep as coins with various weights. It is convenient to keep gold as coins and easy to sell it off when necessary. The value of this gold may not be much lesser when it is sold. This is one of the acceptable methods of investing in gold. Some countries do not charge Value Added Tax for gold when it is traded for investment purposes.

Gold Bars. When you wish to invest comparatively large amount in gold you can invest in gold bars. Gold bars are in variety of weight and can handle easily for investment purpose. An investor can avail gold bars from the market and can keep it in safe custody or bank lockers till he wish to sell it off.

Gold Exchange Traded Fund. This is an acceptable method of investing in gold. This is just like mutual funds and has the same value as gold and made in small units. It is backed with original gold and the value is fluctuating according to the market value of gold. The net asset value (NAV) of such fund is also according to the market value of gold and can redeem it in the same price of gold. The important point is that one can demat (dematerialize) this fund and the main advantage is that you should not take the risk of storing real gold and at the same time you can get all benefit of investing in real gold and more liquid than real gold.

Gold Futures. This is a contract that in a future date that agreed quantity of gold in agreed price and agreed purity can be deliver at an agreed time. The customer should pay only a fraction of the cost at the time of the contract and the rest of the payment at the agreed time. But the agreed price includes the storage and other related expenses. The price may be more than the spot price. This is in anticipation the market price may be high at the time of delivery and the person can make a profit and the cash flow is very less at the time of contract. The market price may be adversely affected and the investor may be in loss also.

Gold Accounts. Gold accounts are operated by gold bullion bank or gold depository service. One can invest in gold accounts and the specified weight of hallmarked pure gold can be kept in this account. The bank or depository keeps the gold according to the instructions of the holder and the terms and conditions of the account. This account can be two types. One is allocated accounts and the other is unallocated accounts. In allocated accounts the banker or the depository keep particular pure gold in a safe deposit box and can be kept there according to the order of the depositor. The account holder should give the price for storage and insurance. In unallocated accounts there is not separate box for each account holder. The Bank itself keeps the gold as a whole till the holder asks for a physical delivery. The account holder should not pay for storage and insurance. Only through the specific instructions of the account holder the banks or depository will trade or exchange the gold. But these accounts handle only a specified weight of gold or more than that.

Small investors can go for Gold accounts pool of gold - you can invest as little as one ounce "or" Electronic currencies linked to gold bullion in allocated storage - which offers a simple and cost-effective way of buying and selling gold, and using it as money. Any amount of gold can be purchased, and these currencies allow gold to be used to send online payments worldwide. Or Gold Pool Account where an investor can deposit a fixed amount per month for a fixed term and the bank will purchase and store gold with that time and at the end of the term, say one or two years the investor can get the gold in desired form or if he wish to sell he would get cash. This is just like SIP (Systematic Investment Plan) in mutual funds. This can reduce the risk of investing a whole lot at one time and the price may be varied and it will not affect the price rise in a specific season.

Gold Certificates. In this case the bank keeps the physical gold and they issue a certificate to the depositor. The depositor can avoid the risk of storing real gold and can sell a part or as a whole whenever he wishes to do so.


Gold orientated funds. It includes shares of gold mining companies, mutual funds and other instruments etc. You can invest in such funds and can make profit from the gold and goldmines.

The above mentioned methods can use to invest in gold. But most of the cases you should get help from a broker just like stocks and mutual funds. You should not give much attention as shares and mutual funds to invest in gold. So get profit from this precious yellow metal.

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