Ever wonder how gold investors get their hands on the lustrous yellow commodity? Counting down to the most frequently used, here are ten ways to buy gold.
#10 Unit Investment Trust
These are rare trusts set up by advisors to buy into mining shares and gold related activities. A well-known, vehicle of this type, BlackRock Gold & General invests specifically in gold mining companies and commodity businesses.
#9 Option, derivative and Structured Product
Various investments on paper with no physical delivery of the gold, allow the investor to leverage gold buying in changing market conditions. Many new structured products offer a representative ownership in a group basket of commodities and track the conglomerate price of all.
#8 Gold Certificate
Gold certificates allow investors to own gold without physically storing the gold. The first US gold certificates were issued by the US Treasury dollar denominations and redeemable in gold. Banks traditionally issue gold certificates to investors while holding the gold on investor’s behalf. The investor gains liquidity and is able to sell the gold with a call to the custodian. The bank custodian arranges for storage, security and insurance of the gold. The Perth Mint offers a certificate program guaranteed by the government of Western Australia.
#7 Gold Jewelry
Decorative gold jewelry drives a significant portion of the gold mined around the world with India alone buying 30% of global production. Gold jewelry typically has less than pure gold content and may fetch less than the original purchase price. Jewelry items are not considered serious investments as markup, manufacturing costs and reclamation costs if used reduce the selling price to a fraction of the purchase.
#6 Gold Mining Company Stock
Shares of gold mining companies may be purchased on stock exchanges around the world. While not physically owning gold, the price of shares bought fluctuates with the price of gold and the conditions surrounding the underlying mine.
#5 Gold Account
Gold bullion can be held in two types of accounts, allocated and unallocated. Allocated accounts are one of the most secure methods of owning gold. They are held by a reputable, recognized dealer and specific serial numbers of gold bars are registered to the owner. Using unallocated accounts, investors do not have specific gold bars assigned to their account. Unallocated accounts hold gold in the form of a pool with other unallocated accounts. Typically the unallocated account advantage is investors will save on insurance and safe deposit fees.
#4 Exchange traded fund
These funds track the price of gold, and other commodities. Each type of commodity is available as an ETF on the London Stock Exchange
A popular South African Coin, the Krugerrand comes in sizes starting at 0.1 ounces.
British investors favor the 22 carat gold sovereigns. These coins of high bullion quality date from about 1887 to 1982.
And the number one Gold Investment
#1 Gold Bar
Bars of high quality bullion and are priced on the day’s market price. Investors do well to buy the largest bar available to reduce the premium.