How to Invest in Gold

Gold has what many modern fiat currencies lack--intrinsic value. Many experts have shown that gold has a set value, whereas fiat currencies like the dollar are prone to inflation. This means that in the long run, the gold price denominated in dollars, yen or pesos will go up, making an investment in gold a great hedge against inflation. Today, investing in gold is easier than ever; here's how.

Difficulty: Moderately Easy

Instructions

1. Decide why you want to invest in gold. For example, some people invest in gold as a safe haven. Gold is unique as a currency that has always had value, so even if the stock market collapses, if you hold physical gold, you will at least be guaranteed to have some real assets.

2. Invest in physical gold by buying gold bullion coins and bars. Gold bullion is almost 100 percent pure gold and is usually sold in 1-oz. increments. A number of countries sell gold bullion coins denominated in their local currency. For example, the United States sells the American Gold Eagle. A number of websites well bullion online (see Resources below).

3. Buy gold-related companies on the stock market. For example, Barrick Gold (ABX) is one of the largest gold mining companies in the world. The advantage of buying gold in this way is that it is liquid. You can sell and buy the stock more easily, but you can't necessarily count on it in the event of a market crash.

4. Buy stock in the SPDR Gold Trust ETF for the newest and most popular way to invest in gold. This ETF (Exchange-Traded Fund) works just like a stock or mutual fund without the fees. It tracks the price of gold so you can invest in gold and not worry about where to bury it or what kind of shady managers are running that junior gold mining company.

5. Buy gold jewelry. This may seem strange, as most gold jewelry is marked up from the actual price/weight of the metal it is made of. The exception is used jewelry. Many estate sales, for example, have large jewelry auctions and are a good place to pick up gold bracelets and rings for a discount. This will involve some sleuthing and more work on your part to determine the worth of the items, but it is possible to make a handsome profit by buying and reselling gold jewelry.

Tips & Warnings

• Like many commodity investments, gold can be volatile, so use common sense to avoid painful losses and never invest more than you can afford to lose.

Resources

• Gold Spot Price and Bullion Dealer
• Google Finance SPDR Gold Trust ETF
• Google Finance for Barrick Gold
• Gold Bullion Dealer

[grammastacie]

on 10/2/2009 very informative, added to my favorites! 5* and recommend.