Investing in Gold FAQs
You've probably seen advertisements urging you to invest in gold on TV, the Internet and in your email inbox. Gold has been used as a store of value for centuries and remains a popular investment-grade commodity. Commodities such as gold are fungible goods. That means the price for gold is relatively constant within its own market, no matter the producer.
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How Can you Make Money Investing in Gold?
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Investing in gold works like any other investment. When you purchase physical gold or equity in companies involved in the gold industry (stocks in gold mining companies, for example) and hold the investment, it may go up in value over time. If you sell your investment at a price higher than the original purchase price, you will make a profit. Like any commodity, the price of gold changes over time based on market conditions. It can go up or down in value, so it is possible to lose money by investing in gold.
What is Gold Bullion?
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Gold bullion is gold that is in a bulk form, such as bars, which have specific weights that make it easy to count. Precious metals are weighed in troy ounces which are equivalent to 31.103 grams. Physical gold may also come in the form of bullion coins (coins of a certain weight made of gold.). Banks may offer gold bullion at rates lower than gold dealers, according to the U.S. Federal Trade Commission.
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What are the Risks of Investing in Gold?
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Investing in gold or any other commodity is risky because the price can go up or down unexpectedly. When you purchase gold, the vendor may charge markups that can diminish profits or increase losses. Gold sellers sometimes try to scam customers by overstating the value of coins or even selling coins that do not contain real gold, the U.S. Federal Trade Commission reports. It is important to research any investment opportunity thoroughly to ensure it is legitimate.
What Should I do Before Investing in Gold?
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There are several important steps to take before investing in gold. You should talk to a financial professional about gold investing so you better understand the risks, benefits and the investment options available. Get an independent appraisal before making a purchase of gold bullion or coins and shop around at different gold dealers.
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