How to invest in Gold for beginners

Among many other investments, Gold as an investment has less risk factor involved. Although the price of the gold can be volatile in the short term period, it has always maintained its value over the long term. Gold has served as a shield or protection against the inflation and the erosion of major currencies and thus it is the best investment option worth considering.

But if you are a beginner, planning to try the option of investing in gold and are skeptical on how to make investments, here are certain aspects that will perfectly guide you in making a profitable investment in gold. Because of less risk involved, gold is considered as the safe haven investment.

Gold in the form of jewellery is not only used as a wearable thing but also works well to sail over the financial emergencies. So traditionally, buying gold has been a financial support system for many years.

If you are a beginner, you have to understand that there are two ways of owning gold- paper and physical. One can buy gold physically in the form of coins, jewellery, coins and gold bars. For paper gold one can use gold exchange trade funds and sovereign gold bonds. Also, for investment purpose, gold mutual funds are also a best option.

Here are certain options, where you can start investing in gold:

1.     Buy gold physically: One can buy gold jewelry, coins or bullions. Gold bullion trade close to the price of the gold and it can refer to gold bullion bars or gold bullion coins. The only difference between the jewellery and bullion is that the later does not have any artistic value. For buying gold bullion, one has to pay a premium over the gold price and it has to be stored in bank deposit box or vault. One can buy the physical gold online or from jewellery store.

 

2.     Buy gold futures: Future contracts are standardized contracts that trade on organized exchanges. The holder can buy or sell an underlying at a specified time in future and at a price from the future contract.

 

3.     Invest in gold exchange trade funds: By investing in gold ETFs, a person instead of owning futures contract and paying attention to the maintenance margin, they can buy shares of ETFs and get the exposure to gold.

 

4.     Invest in gold mining companies: An investment in gold mining companies offers exposure to gold, but the exposure is sometimes limited. Gold mining companies carry operating risks; that can break a correlation to the gold price. The Gold miners are at the risk of a default and their shares can trade lower in case of an operating issue with the company irrespective of the gold prices.

 

If you are planning for investing in gold, find a reasonable entry price. Gold provides protection against inflation. Even though the price of gold is somewhat volatile, it has proven to make steady gains over the period of time. Investing in gold is a very perfect choice for all those investors who want to envelop themselves to some extent from the inevitable effects of inflation.