The history of gold in the role of money has a long life. Precious metals as a method of calculation in trade operations have been used for centuries. Initially, these were copper coins, silver, and, of course, gold. As they were heavy, people started using fiat. However, gold did not lose its fame.
Today, despite the fall in the value of the precious metals, gold as an investment is great. Many companies (including banks) and private investors buy it. FinanceWorld professionals also recommend thinking over the possibility to choose gold as an investment. Why is it profitable to invest in gold? Here are a few basic reasons:
- It is very easy to sell it:
- Gold can replace fiat in most countries;
- It is safe as nothing can damage this metal, even the greatest fire;
- You can store it anywhere, in any conditions: nothing will happen to this metal;
- With time, its price is only increasing.
Investments in gold — the simplest ways
Gold as an investment will bring you the best returns. The longer you hold it, the better the profit you have. The advantage of investing in gold is its worldwide recognition. This metal is a generally accepted measure of value and wealth. And because of the cyclical nature of the economy, when economic shocks occur several times a decade, gold as an investment helps to preserve investor capital, when money and other assets drastically lose in value. You can choose any possible methods to invest in it.
Investment in physical metal
The most reliable way to invest in gold is to buy metal.
You can buy:
Buying and selling coins and bars can be done in banks. Jewelry is always available in jewelry stores and on the private markets. The most profitable way for the investor to buy and sell metal are coins. The taxes here are smaller.
The least profitable method is to buy jewelry. The price of jewelry includes the cost of the store, the expensive work of the jewelry master, as well as the value of the artistic value of the product. Selling jewelry is possible at the price of scrap.
Buying gold on the exchange
This is similar to buying currency. When buying metal in this way, the investor in the brokerage account of the foreign exchange market will have metal. The minimum amount of the purchase and sale is usually 10 grams or 1 lot. Through the purchase of metal on the exchange, you can later get it physically. A part of the precious metal is located in the storages in the form of ingots.
Investing in shares
Buying the shares of gold mining companies is not the worst way to invest in this metal. Investing in stocks of companies has an advantage over other ways of investment. By its nature, gold is not a manufacturing asset. In itself, it does not generate cash flow and profit. Profit or loss from investments comes from pricing in the commodity markets, as well as on the expectations of investors and the actions of central banks. Getting shares, you become the owner of the gold mining business — a shareholder. Shareholders receive a portion of the company’s profits in the form of dividends.
Possessing shares of companies, the investor can expect to get profit and the price of raw materials does not mean much here. Business is focused on profit in any market situation. If the price of metal falls, the company will reduce costs, production, lay off personnel, invest less in new fields. But in general, the company will be in profit. And shareholders will get dividends in conditions of low prices for raw materials. Of course, the shares of companies with a low price of gold will lose in price. However, the investor will constantly receive money that compensates for the loss, in contrast to investing in “physical” gold in other ways.