How To Buy Gold
Gold futures are a good way to speculate on the price of gold rising (or falling), and you could even take physical delivery of gold, if you wanted, though physical delivery is not what motivates speculators.
how to buy gold
The biggest advantage of using futures to invest in gold is the immense amount of leverage that you can use. In other words, you can own a lot of gold futures for a relatively small sum of money. If gold futures move in the direction you think, you can make a lot of money very quickly.
Risks: ETFs give you exposure to the price of gold, so if it rises or falls, the fund should perform similarly, again minus the cost of the fund itself. Like stocks, gold can be volatile sometimes, but these ETFs allow you to avoid the biggest risks of owning the physical commodity: protecting your gold and obtaining full value for your holdings.
Coins typically have lower gold content than gold bars. A one-ounce American Eagle coin, for instance, is only 91.67% gold. In fact, the coin weighs 1.1 ounces, approximately one ounce of which is pure gold; the rest of the weight is silver and copper.
Rather than investing in a single company tied to gold, you invest in a basket of gold-related securities through gold mutual funds or ETFs. Gold funds may track the price of gold, include the stocks of multiple gold mines and refineries or provide exposure to gold futures and options.
For investors willing to take on more risk, futures and options may be attractive. (If neither of those words means anything to you already, you should probably avoid these gold investments for now as they are highly speculative.)
With gold futures, you commit to buy or sell gold in the future at a specified price. Under a gold options contract, you have an agreement with the option to buy or sell gold if it reaches a certain price by a predetermined date.
In the U.S. the COMEX is the primary exchange for gold futures, and therefore, the place where the most-widely quoted gold prices are set. The London Bullion Market Association also provides a twice-daily \"fix\" price used as a benchmark for large market participants.
In general, look for what's known as the \"gold spot price,\" that's the price at which buyers and sellers are willing to trade gold today, as opposed to some future date (specified in a certain month's futures contract.)
Gold is considered a way to hedge against inflation and can be used to diversify your portfolio. It's also a highly liquid asset, so you'll be able to find a buyer for your gold when you need to sell.
You can buy physical gold from retailers like JM Bullion and APMEX, as well as pawn and jewelry shops. (Do note that buying it from jewelry stores and pawn shops could be riskier as it could end up being lower karat gold.)
Profits from trading securities like stocks and bonds are known as capital gains and are taxed at special long-term and short-term capital gains rates. But the IRS looks at profits you earn from trading gold and other \"collectibles\" differently.
For instance, the most common type of gold used in jewelry in the U.S. is 14K gold, produced from 58.3% pure gold and 41.7% of other metals like copper and silver. Other common mixtures of gold are 18K, and 22K.
Aside from buying physical gold, you can invest in a variety of gold-backed securities through investment companies, brokerage accounts or gold IRAs. These include gold ETFs, gold mutual funds, mining stocks and futures contracts.
Investors buy shares in the fund through a brokerage, whether in-person or online. ETFs charge fees, but they tend to be lower than fees charged by gold mutual funds. They may also be lower than what it costs to insure and store gold in a facility like a safety deposit box. On average, ETFs charge annual fees of 0.59% of assets invested ($59 per $10,000 invested), according to ETF.com.
The contracts (whose value can also be settled for cash) can be traded among speculators who hope to make money by betting that gold will increase (or decrease) in value before the settlement date. Futures contracts are usually for 100 troy ounces of gold, while their prices are quoted in U.S. dollars per ounce.
To buy gold futures contracts, you need a brokerage account with a full-service broker that support futures trading, such as Charles Shwab, E*Trade or TD Ameritrade. You may also open an account directly with CME Group, the derivatives marketplace that manages NYMEX.
A gold IRA is similar to a traditional IRA in that it lets you invest in tax-preferred securities, but instead of holding stocks, bonds or mutual funds, you hold physical gold bullion, coins or bars. Despite its name, gold IRAs also give access to other precious metals, like silver, platinum and palladium.
Top gold IRA companies are typically transparent about their fees and offer unbiased educational resources and responsive customer support. They also feature intuitive account setup and options to rollover different retirement accounts.
Because gold is volatile in the short term, and can lag behind stocks in terms of long-term price appreciation, financial advisors typically recommend investing no more than 10% of your savings in gold.
More and more investors are worried about the social and environmental impact of their investments. Gold mining can take a significant toll on the environment and mining practices have raised concerns around human rights, as many gold mines are located in conflict-affected areas.
In the U.S. the COMEX is the primary exchange for gold futures, and therefore, the place where the most-widely quoted gold prices are set. The London Bullion Market Association also provides a twice-daily "fix" price used as a benchmark for large market participants.
In general, look for what's known as the "gold spot price," that's the price at which buyers and sellers are willing to trade gold today, as opposed to some future date (specified in a certain month's futures contract.)
Profits from trading securities like stocks and bonds are known as capital gains and are taxed at special long-term and short-term capital gains rates. But the IRS looks at profits you earn from trading gold and other "collectibles" differently.
In times of inflation, stock market uncertainty and concern in the banking sector like we're experiencing now, many investors turn to gold to support their holdings. These issues and other risk indicators may have you taking a second look at your portfolio and thinking about new ways to invest your money.
You can own gold in traditional gold IRA, Roth gold IRA or a Simplified Employee Pension (SEP) gold IRA that are tax-advantaged and structured like their standard counterparts. However, the IRS mandates that your precious metal is stored through an IRS-approved custodian who can arrange for your gold to be stored in a depository.
Gold IRA investments are typically available through precious metal companies that assist you in opening your self-directed IRA account. The company also helps you select a custodian who purchases gold on your behalf. Goldco, Birch Gold Group and Augusta Precious Metals are a few gold IRA companies commonly used by investors.
You can invest in physical gold in several ways, including purchasing through an online dealer or at a local dealer or pawn shop. Monitor the price of gold, so you're not at a negotiating disadvantage. Keep in mind, you may pay a lower premium if you buy gold in large amounts because there's less processing than with coins.
Gold exchange-traded funds (ETFs) are a convenient option to get in on the gold action without having to store large bars securely. You can purchase shares in an ETF that owns gold in a physical vault, but you can execute that ETF trade from a computer or device anywhere with an internet connection.
You can buy gold ETFs through a brick-and-mortar or online brokerage. As such, you can easily exchange your gold for cash, making the investment highly liquid. Two of the most popular ETFs in the United States are SPDR Gold Shares ETF (GLD) and iShares Gold Trust ETF (IAU). Learn more now or use the table below to explore your gold-buying options.
Like ETFs, gold mutual funds offer you access to a piece of the gold market with a fund that invests in the precious metal or owns shares in companies producing gold. Gold mutual funds may be more affordable and diverse than individual stocks. Another benefit is that you don't have to research the gold mining companies you invest in; the fund's manager will do that for you.
Like gold ETFs, gold mutual funds are available through a brokerage. Before investing, review the fund's overall performance, yearly returns and asset allocation. Investing in gold mutual funds may be more cost-effective than owning physical gold bars or coins.
Many investors opt to invest in gold mining companies, especially when gold prices are rising. You may profit both when gold prices rise and if the mining company increases production. Be aware, however, that not all mining companies are managed well, and poor-performing enterprises could impact your share price.
Futures are contracts you can trade with other speculators seeking to profit by betting they will reach a specific price by a specific settlement date. Exercise caution with gold futures because you can lose more money than you put into your initial investment. Depending on how the contract is structured, you could actually owe money on the contract. Many investment experts recommend gold futures only for more experienced traders.
You can buy gold futures contracts on the New York Mercantile Exchange through a full-service broker that offers futures trading. You'll fund your account and trade gold futures through your account in the same way you trade stocks through your brokerage. Contracts are typically for 100 troy ounces quoted in U.S. dollars per ounce. 041b061a72