Lux Investing
How do I go about investing in gold?
Do I buy shares in a mining company? Or do I buy physical gold?
Public Comments
- You can buy gold on goldmoney.com or bullionvault.com. If you want to physically hold gold you should find a gold bullion dealer near you, or perhaps even a jeweller. However you will be paying for since the dealer need to maintain a profit margin.
- Wikipedia has a great article on this: http://en.wikipedia.org/wiki/Methods_of_investing_in_gold Yes, you can buy physical gold, but then you have to pay transaction costs and maintain it somewhere. Probably the easiest and cheapest way to invest in gold is through an ETF like GLD or GDX. As you mentioned, you could also buy shares in a major mining company, like BHP or RTP, but (1) that wouldn't be a pure play in gold and (2) you'd also be taking on the risk of the individual company. Best of luck and happy holidays!
- Gold is a commodity, just like wheat or pork bellies. You can buy gold futures as the same as you would wheat or pork bellies and if you do you are almost guaranteed to lose money. Commodity trading is a specialized profession and definitely not for the average person. You can buy gold and for the small investor the best method is to buy bullion coins, American gold eagles, Canadian maple leaves and South African kruger rand are your best bets. You can get bullion coins from coin dealers or on line, be sure to shop around and know the spot value for gold before you buy as prices can vary drastically. Having said that, I have to tell you that gold sucks as an investment. You make no money from interest and there is absolutely no guarantee that you are going to make money and there is a good possibility you could lose money.
- I think most who buy some gold, either coins or ETF, do so for piece of mind in uncertain times. Gold will never be worth nothing. Over extended periods of time, it's value will generally keep up with inflation. As a commodity, gold is subject to wild swings in value as ppl speculate. You have to be both careful and lucky to break even on gold in the short term. As an example, I got caught up in the gold run of the early 80s when the price rocketed from $100 to $800+ in a matter of months, based on speculation by one of the Hunt brothers. With my superb timing, I bought near the top. In a matter of weeks, the scheme he had engineered collasped, and I lost my shirt. Gold is once again in the $800+ range, 30 years later. I do think there is a solid base for this run up and that it will never drop much, if any lower, and does have good potential for going higher, since the financial world is in such a mess, and getting worse. If you're buying for piece of mind, now is a good time to do so. But, it's still somewhat a gamble, as is any commodity. Oil might be just as good, or better place to put your money. All a gamble.
- pick up a copy of precious metals investing for dummies. the guy that wrote the book is a very active trader and knows the market inside and out. you can also listen to financialsense.com.
- There are 4 options: 1. physical gold 2. Mining company shares (or bonds!) 3. precious metals ETFs 4. e-gold I really like the egold provider bullionvault.com -- they give you a free gram of gold when you sign up. That's awesome. But if you believe that our economic system as a whole is about to collapse, physical gold is really the only way to go.
