If you are interested in investing in gold with little money? Here’s an in-depth beginner’s guide on the best ways to invest in gold online for guaranteed profit.
Investing in gold is the only recession-proof way to invest your money, as it provides the most direct counter to the dollar. Each time the dollar falls—such as during with a recession—the price of gold rises. This has been the norm for ages and it won’t change anytime soon.
And now that the economy suffers episodes of long-term ailments, the real potential for profits in the coming years and decades will no longer be found in stock investing, but in gold.
If you are wondering why you should invest in gold and not stock, you must consider the fact that for ages the tangible value of gold has been used as the basis for real value—even though central banks will never acknowledge this. That’s because the price of gold never dances to the tune of economic conditions.
So, if you really want to save yourself from heart attacks that result from the declaration of a drop in the value of certain stocks, gold is the way to go.
Is Buying Gold a Good Investment Idea for a Beginner?
While the track record of this precious metal in the long term does not demonstrate a significant movement at all, its price in the recent years has experienced a dramatic increase. In the last decade, the value of gold has increased to almost 400%. Gold provides an avenue for portfolio diversification and can give financial security in times of crisis.
Having said this, it is not that simple, however, to look at gold as a usual money making tool in the stock market. Investing in gold is not the same as investing in stocks or bonds. Stock or bonds investment allows companies to use an investor’s capital for its daily operation and, possibly, expansion of business endeavors. In other words, it is investment in productive growth. Investing in gold however is like investing in a currency. It isn’t productive growth; rather, investing in currency entails a likelihood that its purchasing power will improve in some future time. Stocks or Bonds are investment to build value, while currency is an investment to hold value.
Now is gold a good investment? My Answer is YES and NO. What this means in that the answer is indefinite. In fact, i believe the answer is inconsequential at this point in time. Rather than focusing on the profitability of gold, you would be better off answering this more important questions:
What do you know about gold?
Why do you want to invest in gold?
The reason why the two questions above are more important is because in the world of business and investing, knowledge and purpose is more valuable than money. The need to always invest in diverse businesses and ventures cannot be overemphasized. Whilst some can wake up to the inspiration of what and where they need to invest in, yet others might find it pretty challenging to decide on the type of investment they should invest in. One the other hand some people undertake thorough research on a variety of choices before determining which to dabble into.
One commodity that has continued to gain investors over the years is Gold. However; this is not to say that some experts wouldn’t continue to discourage one from dabbling into this venture. It is very expedient that you are informed about the advantages of an investment before venturing into one. So as you read on, this might be a very good avenue to draw a thorough conclusion on whether the gold is a good investment or not.
If the purpose for buying gold is for its store value – that is, it can be stored and reclaimed at some other time; then it would be helpful to note that it is only as valuable as the amount someone would willingly pay at any given time. Though gold is a substance considered to be of value almost anywhere in the world and can be liquidated easily, buying gold for its store value is not at all recommended to small investors for the sole reason that it doesn’t create cash flow.
If on the other hand your primary purpose of buying gold is to make a profit because of its current outstanding price, then it would be like gambling. Holding on to the promise that it will be bought for a higher price at some later time is not a sound investment advice or strategy. There is no way to measure the value of gold. The rate of gold is primarily dictated by its buyers and sellers. Buying gold in the form of bullion bars and coins can provide stability in times of inflation and other economic crisis.
As much as possible, I will advice you as a beginner to invest with the thought of creating cash flow from your gold investment. ETFs and gold mining shares are examples of gold investment opportunities that can actually create cash flows in much the same respect as stocks and bonds investment.
Understanding the Risks of Gold Investments
An investor contemplating if gold is a good investment needs to understand the risks associated with it. First of all, gold investments should never be treated like stocks, bonds, or mutual funds. Trading gold to create upswings in the market can cause financial instabilities. Again, investing in gold is like investing in currency, it doesn’t build value.
Secondly, the purchasing power of gold can lose its ground anytime. The value of gold is not guaranteed to increase or to stay put at its current value at any time. Third, investing in gold more than what is necessary can put an investor’s financial future in jeopardy. The value of gold may drop rapidly in a short period of time, especially now that gold prices are currently at record highs. Over investing is never wise, be it in gold or other types of investments.
So, is gold a good investment? Well, it really depends on the knowledge base, purpose of the investment and net worth of the investor. Investing in gold for its store value is recommended for high-net worth investors. Gold investment for its store value can provide financial security when inflation crisis affects the economy. It can also protect investors from losing their wealth in such crisis. Here are other good reasons and information that you must arm yourself with on why you must invest in the gold business
a. Investing In Gold Means Immunity against Economic Disaster
You might want to wonder how this plays out, but truth is that gold does help you against some deadly financial mistakes. When the economic meltdown started from the west, in no time at all the effect trickled down to other parts of the world. This is no wondering they say the world is indeed a small one.
Once such an economic disaster happens to a country, one of the factors affected is usually the currency which becomes devalued from inflation as the global banking structure caves in. This means that when you make the mistake of tying all your wealth down in cash, then you might find that in no time your net worth plummets. Therefore, one great way to create immunity against this is the investment in gold. So that when the value of currency deteriorates, the gold consistently rises.
b. Expansion of Investment Portfolio
Experts have always advised on the need not to put all your eggs in one basket. Whilst some know the importance of having a diversified investment portfolio, yet others prefer to stick with only investing in shares and stocks. What then happens when there is an economic disaster? When there is a disaster economically, it affects the shares and stocks and by extension the currency.
However, if you ensure that you have a significant amount in the gold bullion investment, then you can sure guard yourself against a deadly blow. This is because there is usually a very tight percent of the price of gold going higher, as the stock market deteriorates. For that reason, it pays to invest in gold as well as other financial instruments wisely.
c. Great Investment field Because of its ability to be scarce
Investors who have experienced a boom in the gold venture know how important it is not to joke with such an investment as gold. From time immemorial till now; there has always been the demand for gold. This demand might not be so readily met within a short space of time because gold isn’t manufactured, but mined.
Therefore, over the years experts have come to realize that the demand for gold might not plummet but rather would be on the increase because of its demand from nations whose thirst for gold is on the increase. Therefore, you can be sure that as the demand for it increases, the price definitely would follow suit thereby giving investors adequate returns on their investments.
d. The Investment in Gold Has Long Term Potentials
The potentials involved in the gold venture far outweigh its demerits. When investing in gold by buying it for the sole purpose to sell it in future, you might want to agree that it is of great importance because gold in its long term goes upwards.
The price of gold in short or medium term has the ability to fluctuate, but when stored for the purpose of long term, you can be sure that it would appreciate .With gold investment you can be confident to boycott the kind of risk involved when you invest in shares and stocks. However, with the gold bullion, there is the assurance of great profit in the long run even if there might be a fluctuation in the short to medium term
e. Gold is so easy to procure
Good news is that trading and buying of gold has gone virtual. With the advent of diverse online businesses and investments, the purchase gold isn’t something that might cause too much stress. There are plenty dealers who are online willing to either buy or sell gold. This could be in form of the bullion in gold coins or gold bars. This process is a hassle free one that you could get over and done with within a short space of time. These dealers also offer delivery methods and so you can be sure to have your commodity at your doorstep after you have agreed on a price.
There are many more reasons why venturing into the gold business is a great bargain. There are a thousand and one people who have gone this way and have had only success stories to tell, whilst on the other hand some have also tried it out and got their fingers badly burnt. You might want to say that this is a clear case of what might work for one might not readily work for another! Therefore, it is still very expedient that you ask experts or even mentors in this field to help get you informed as well as bring you up to speed with how investing in gold works.
Do not forget the place of research as discussed in the first paragraph. Doing this would to a very large extent help you get knowledgeable, as well as know the best ways to take in the gold business. By and large, investing in gold by all standards is one great way to become rich.
Now what are the best ways you can invest in the safe-haven metal? Here are five options you can never go wrong with.
6 Best Ways to Invest in Gold With Little Money
I. Gold bullion-: Gold bullion is the ultimate expression of pure value. Even in the past centuries, many civilizations have recognized the permanence of gold’s value. Wars were fought over gold. Disputes were settled with gold. And wealth was measured in gold.
Even though people have now been lured away from gold with other forms of investment, it remains the only real money whose value cannot be changed or controlled by government fiat. It’s price only fluctuates in line with increasing or decreasing demand.
However, owning gold bullion comes with a disadvantage: it tends to trade with a wide spread between the bid and ask prices, yet you won’t make huge profits because you will buy at retail and sell at wholesale. Just to break even, you will need a big price jump. That shouldn’t worry you unless your aim is to trade in gold—which is a bad reason to buy gold bullion. Gold is meant to be a defensive asset for holding value, not a speculative asset. It’s meant to protect your money from falling in value over time.
II. Gold jewelry-: The most popular way to hold gold is to invest in gold jewelry. This approach alone, according to the World Gold Council, accounts for nearly 50 percent of gold demand.
The percentage of pure gold a piece of jewelry contains is measured in karats—and the value ranges from 10K to 24K. 24K gold is pure gold, but 10K gold contains 10 parts of gold and 14 parts of other metals, making is 41.7 percent gold.
Before investing in gold jewelry, you must understand what the karat value is and how this affects the price and durability of each piece. Also, you must bear in mind that the price of a piece of gold jewelry also depends on its weight in grams–the higher the gram weight, the more expensive the piece.
III. Gold mutual funds-: If for some reasons you are just not comfortable with the idea of investing in physical gold, but still want to invest in the precious metal in some other way, then you should consider investing in gold mutual funds.
Gold mutual funds hold portfolios of gold stocks owned by reputable gold-mining companies, such as Newmont Mining. Your target should be a large, well-capitalized company that has a profitable track record. Such companies usually have their own mines, where they produce certain quantities of gold each years.
IV. Closed-end funds-: Many closed end funds invest in gold. Depending on the market, these funds typically trade at a discount or premium to the underlying asset. So, if you find one trading at a discount, you can invest provided you expect the price of gold to go higher. However, in closed end funds, fees are typically slightly higher than what obtains with mutual funds.
V. Exchange-traded funds (ETFs)-: This special type of mutual fund trades on a stock exchange just like an ordinary stock. The fund’s exact portfolio does not change, as it is fixed in advance. In the United States, two ETFs trade in gold: TRACKs Gold Trust and COMEX Gold Trust. Either fund offers a practical way to hold gold in an investment portfolio.
VI. Gold options and futures-: If you are a more experienced investor and can speculate in gold prices, then you can invest in gold options. In the options market, you can speculate on price movements in either direction.
Buying a call means you expect prices to go up, and this mover fixes the purchase price so that the higher the price goes, the wider the margin between your fixed option price and current market price. Buy a put, on the other hand means you expect prices to go down.
Buying options is risky, and more people lose than win. It’s also very complex and requires experience and understanding, so don’t give it a thought unless you are highly experienced.