Best Way to Invest in Gold for Beginners in 2022
Gold has been and remains one of the most popular investments in any economic situation (especially during a crisis). It’s a perfect defensive asset that protects investors’ money from devaluation, inflation, and market collapse. The gold value is slightly volatile, but it usually grows in crisis, as the investors hope to (at least) preserve the value of their investments using this precious metal.
In the past, gold could be purchased only in physical form, but now investing in it is a lot easier than it seems. Let’s figure out how to invest in gold.
Gold futures are financial derivatives that oblige the buyer to purchase an asset at a predetermined price. The futures prices follow the trend of gold on the world market. The spread between buying and selling gold is very low; therefore, futures trading provides opportunities for speculation and strategies that are not accessible to bullion and coin buyers.
CFD is a financial derivative that allows traders to trade a certain asset without owning it by entering into an agreement with another investor in order to speculate on the price moves in this commodity. CFD is considered the easiest and the most cost-effective method of gold trading, as in this case, you don’t have to make large investments or worry about meeting margin requirements.
ETF is a type of investment fund, whose shares are traded on the stock exchange. ETF prices are determined by the underlying value of the portfolio. The only asset of ETF is gold. Therefore, ETF share prices follow the movement of the metal price.
Stocks of Gold Miners
Such securities are affected by many factors, but mostly by the value of gold. They are quite highly liquid and can bring dividends (even during periods of a gold price decrease). However, stocks of gold miners may be overvalued because of various factors.
You can buy them from the banks, numismatic shops, and auctions. The price of golden coins is determined by the value of the gold on the London Intercontinental Exchange. The main disadvantages of buying and investing in gold coins are a large spread and a need for even more careful storage. You can sell gold coins only at a large discount on their stock price. Therefore, it may take five to ten years to get income from such investments.
Gold bullions can be purchased from the banks. As with currencies, each of them has its own buying and selling exchange rates. Bullions can be also purchased on the exchange, but the procedure for withdrawing metal from the market is difficult and inconvenient.
This is the most complex asset: its cost is not linked to the price of the metal itself, and it can be sold rapidly only as scrap. The buying and selling prices of jewelry can be very different. Investing in jewelry is more like investing in art than gold.
Gold Backed Crypto
Gold-backed crypto works similarly to digital assets. You can buy and sell it for cryptocurrency, store it in your wallet, and trade it at any time. As well as bitcoins, gold tokens are equipped with blockchain technology, which, among other functions, allows trading digital assets. If you invest in gold-backed crypto, you will see that the price of your asset will change along with the price of gold.
This is the only tool allowing you to make a profit quickly. On the stock exchange, you can buy both precious metals and their futures, as well as trade shares of gold mining companies and jewelry manufacturers.
The most reliable exchanges are Admiral Markets, Interactive Brokers, eToro. The exchange laws are on your side: they will help you profit from both increase and decrease in the price of precious metals. During the trading day, the price of precious metals changes faster than the bank rate. On the stock exchange, you can trade both gold and derivatives.