The answer to this question varies based on your personal preferences and needs.
The best kind of gold investment is the one that is right for you and to find out what works for you it is necessary to answer a few important questions.
1- Can you or do you want to take possession of the gold?
If the answer is yes, gold bullion coins or gold bars will allow you to do that.
A gold bar from Fort Knox weight 400 troy ounces which is 27.5 pounds so handling any quantity of gold bars could be problematic. An advantage is that gold bars sell for a very small premium over the spot price of gold. Gold bullion coins come in several sizes as small as 1/10th of a troy ounce of gold. Depending on the gold bullion coin you will have a choice of a wide variety of sizes with varying entry prices. When you take possession of your gold you have to consider shipping, storage and security.
If you do not want or cannot take possession of the gold, you have several other choices.
- You can buy gold bullion coins and gold bars and arrange to have them held by an agent. A service like Bullion Vault stores your gold in a secure vault free of charge.
- You can buy stock in gold mines or mining companies, the choices are senior or junior mining stocks or gold ETFs (exchange traded funds) or you can buy stock in gold mutual funds.
Some words of caution are in order about gold mining stocks. Senior mining stocks have producing mines and as such they carry less risk but they are not without risk! Junior mining stocks may be in exploration mode only and may not have producing mines. Junior mining stocks carry more risk but if a junior mining stock strikes gold, the upside potential is high. The equation with stocks is that the larger the risk the larger the potential gain, provided you do the required due diligence about your stock purchase. You can always lose your investment so don’t bet the money you need to live.
2 – Why are you buying gold?
When you want to speculate in gold you will choose a different investment than you will if you are looking to diversify your investments and create a safe haven hedge against inflation. After you answer this question you can more easily make an informed choice about your gold investment and select a gold investment that fits your needs and your risk tolerance.
3 – How to identify a gold scam?
When you invest in gold you need to work with a reputable dealer to get value for your investment. There are many gold scams and here are some ways to identify a gold scam. Unsolicited high pressure phone calls, especially from offshore sales people are often gold scams. Promises of big profits, high pressure sales or terms like non-monetary, non-minting, gold clad or gold look are an indication of a scam.
As with all investments know what you are buying, know the spot price of gold and pay only 5-20% over the current spot price of gold for bullion coins.