The majority of professional analysts and private investors agree that investing in gold is the safest way to secure assets and ensure a minimal profit with your portfolio. However, there are a number of ways to invest in gold, either directly, through the purchasing of physical bullion and exchange traded funds (ETFs), or indirectly, through the purchasing of mining company stock and futures. To help novice investors mitigate risks we’ve reviewed the top 3 ways to invest in gold safely:
Investing in Physical Bullion
Buying physical gold in the form of gold bullion (coins, ingots, and bars) is by far the safest way to invest in gold. Unlike other gold instruments, bullion gives you the advantage of actually being able to keep the gold in your possession. You can store it at a secure, private location, or keep it in a holding box at a reputable bank. If you don’t have physical possession of your gold and the institution who is storing your holdings goes bankrupt, you may be at risk of being issued a promissory note that has no actual value. The safest way to invest in bullion is to buy ingots or bars from trusted refineries.
Exchange Traded Funds
The second-safest way to invest in gold other than buying bullion is to invest in an exchange-traded fund (ETF). These funds are managed by professionals who uphold stringent standards to ensure a minimal return for their investors and the organization as a whole. In essence, you invest your money into the fund and then the fund managers choose the most ideal way to facilitate the highest return possible. The Central Gold Trust is a good example of a fund who maintains security by holding a large percentage of their holdings in physical gold.
Allocating a Portion of your Investment Budget
Finally, regardless of which type of investment you choose it is always a good idea to only allocate a fixed portion of your yearly investing potential towards investing in gold. If your portfolio is designed with safety and stability in mind, a higher percentage of your investment budget should be used to buy gold in order to back your assets. If your portfolio is geared towards higher profits in the short-term, it would be wise to only spend 10% – 20% of your annual investment budget on precious metals of any kind.