How to Invest in Gold Certificates
There are many reasons why an individual investor would want to place a portion of his or her portfolio in the gold market. Gold tends to move in the opposite direction of the stock market, making gold an excellent hedge against falling stock prices. Gold can also be a good inflation hedge, so investors who see high inflation on the horizon may want to consider investing in gold. Even so it is important to invest in gold the right way - the cost of investing directly in gold bars and gold coins can be quite high.
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Instructions
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Track the price of gold to get an idea of how the metal is trading. You can track the price of gold on a daily basis by consulting online investment sites like Yahoo! Finance and Money.CNN.com. You can also check the previous day's closing price of gold in the Wall Street Journal and other financial publications.
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Open an account at an online brokerage firm or mutual fund company. You can purchase gold certificates by purchasing the exchange traded fund that trades under the ticker symbol GLD. This fund directly tracks the price of gold, so when gold prices rise the value of the fund rises. When gold prices are on the decline the price of this fund will fall accordingly.
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Contact your online brokerage firm or mutual fund company when you are ready to buy. If you are confident that the price of gold has nowhere to go but up, you may want to invest all of your funds at once. If you want to spread the risk and avoid the danger of buying at the top of the market you can spread your purchases out by investing a little bit each month over a period of a year or two.
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Track each purchase you make using a spreadsheet program like Microsoft Excel. It is important to track how much you invest in gold. This will help you see how you are doing, and it will also make it easier to figure out the tax consequences of your gold investment.
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