As we have seen through the ages, gold has a history of performing well against inflation, economic and political uncertainty. In that case, it’s no surprise that Yellow Metal is doing well now.
If you want to buy bullion, there are many options, you have probably heard of the two main options that are available: exchange-traded funds (ETFs) and futures as well as buying physical gold (also called gold bullion) for investing in commodities and equity investments.
Is it time to buy gold?
Gold price went through various highs and lows in April, part of the financial crisis and the war in Ukraine. In April, Russia attacked Ukraine, hitting over $2,000 an ounce and falling to $1,800 an ounce a few days later.
Such a price movement is worth watching when deciding to buy gold. In one day, the purchase price can be very different. Getting daily information can help you understand the kind of gold you want to invest in and the company you want to buy from. Once you’re satisfied with knowing the current patterns, it’s time to decide how you can make the most of your investment.
Let’s look at the options.
What is Paper Gold/ ETFs?
ETFs are funds that are typically designed to focus on a specific segment of the financial system, such as commodities. Gold ETFs refer to ETFs that tracks gold as a commodity.
If the fund tracks gold, it may be tracking gold held by the bank, or generally gold in the future. Gold futures are contracts that promise to purchase or trade gold at a special price on a certain day.
What sets a difference between physical and paper gold?
The significant difference between physical gold and gold ETFs mentioned by the latter proponents is that physical gold is in high demand. It is wanted and used not only by investors but also by electronics and jewellery manufacturers.
This is in contrast to paper gold, particularly futures, which moves in the realm of stock market speculations.
Another difference that is obvious is the fact that when you buy bullion, you have the assets delivered to you physically. It’s easier to value gold bullion especially if it comes with certificates of authentication. It’s much easier to realize the value of physical gold than that of paper gold where you only have a share certificate for shares that have not been cashed out. Physical gold is as precious as the rare material used in manufacturing and luxury across the globe.
- Paper gold has no intrinsic value. It is only necessary that the business be profitable at all times.
- Purchasing physical gold makes your investment worthwhile and easy to identify.
- When you buy gold, you are at the mercy of a third party identifying and managing your resources.
Choose carefully when physical gold
Regardless of how you are going to buy gold, it is important to do some research. If you’re buying physical gold bullion, find a reputable gold dealer who has good information about the gold price movements and gets good reviews from other customers. Choose a gold dealer with a good track record. If they have a good reputation, you know you will at least have some guarantee of the gold you are being sold.