Gold bullion can be purchased for the market price of gold plus what it cost to refine, fabricate, and ship the material. Gold bullion comes in the form of bars and coins, gold coins are more easily stored than bars. Purchasing price for gold coins is usually marked up one percent over market price. The mark up makes gold coins not suitable for short term profit, but as a hedge against inflation.
Coins are purchased as fractions and multiples of one troy ounce. The purity of a gold coin is at least 0.900 percent and can be purchased from the US mint and other countries mints. Some popular coins are the American Eagle, American Buffalo, Canadian Maple Leaf, Chinese Gold Panda, Swiss Vreneli, and South African Krugerrand. Remember gold bullion is not meant as a short term profit, but as a form of security for harder times.
Gold stocks are secure investments represented by shares in a publically traded company in the gold sector. Usually these investments are in one of 300 mining companies that are publically traded. Gold stocks are riskier than gold bullion but can provide more profit. Investors are buying ownership in a mining company and therefore when profit is made receive a share of the profits.
Many gold stocks pay dividends therefore when the company is not growing a percentage is still payed to investors. The percentage is not usually above two percent. One thing that investors can do is have cash dividends reinvested into the company, that way when stock prices are low more shares are purchased and when prices are high less shares are purchased. This way in theory the dollar average per share is equal and when profit is made more money is returned to the investor.
Gold futures are another way to invest in gold, like a gold ETF they are complicated and if you are new to investing in gold one of the above stated investments would be more suiting. A gold future is a contract agreed upon by two parties, a seller who does not have gold yet but agrees to sell for a fixed price, and a buyer who agrees to buy gold by a certain date. The buyer must pay a margin, which is a down payment on the not yet acquired gold.
Gold futures work on a dollar earned a dollar lost principle, stating that for every dollar one party gains the other loses. The idea is to profit from the difference between the contract purchase and sale price. Investor’s must have good timing for when to conduct a contract, and buyers must watch the market. Either way a future is a complicated investment that is quite risky but can make someone capital.