Mutual funds and ETFs are generally the easiest and safest ways to invest in gold. Each share of these securities represents a fixed amount of gold, and you can easily buy or sell these funds in your brokerage or retirement account. Another alternative to investing in gold bullion is to buy a share in a gold exchange trading fund (ETF), such as PDR Gold Shares (GLD). Investors can also invest in gold mutual funds such as Tocqueville Gold (TGLDX) and Gabelli Gold Load-Waived (GLDAX, LW).
Each share in the fund represents a portion of gold. For example, each share can be equivalent to one tenth of an ounce. You can buy a fund just like you would with a stock, at a brokerage agency or other financial institution that sells gold ETFs and gold mutual funds. While you probably want to buy ETFs that actually hold physical gold, there are funds that invest in companies in the gold industry, often gold mining stocks or gold streaming companies that offer funding to gold miners.
Often, the best thing you can do for your portfolio is to follow your investment plan, not rush to buy gold bars. Owning stocks in a gold mining company or a gold ETF exposes you to the gold industry and, since gold doesn't necessarily move in conjunction with the stock market, it can help to further diversify your shares. Because gold is volatile in the short term and may lag behind stocks in terms of long-term price appreciation, financial advisors usually recommend investing no more than 10% of your savings in gold. Adding gold to your portfolio can help you diversify your assets, which can help you better weather a recession, but gold doesn't produce cash flow like other assets and should be added to your investment mix in a limited amount and with caution.
While many assume that gold ingots are a form of large gold ingots, in reality they are any form of pure or almost pure gold. When buying gold jewelry, keep in mind that the price you pay will be linked to the craftsmanship of the piece and that the amount of gold it contains will be only a percentage (carats) of its total weight. Investing in gold stocks, ETFs or mutual funds is often the best way to expose yourself to gold in your portfolio. Some retailers consider buying more than 100 gold bars (or 500 gold coins) a “wholesale purchase”, but this will largely depend on the seller.
Investors can also invest in gold mutual funds such as Tocqueville Gold (TGLDX) and Gabelli Gold Load-Waived (GLDAX). Instead of investing in a mutual fund, you can also buy shares of gold mining companies (often referred to as gold stocks) directly. Gold is reputed to be a recession-friendly investment when the stock market retreats sharply and the price of gold often rises. Read on to discover how to invest in specialized gold ETFs and gold mutual funds, and what to look for in a fund.
As demand for gold changes, its value may fluctuate depending on the buying and selling activities of ETFs.