Gold Investment Opportunities, Methods to invest in gold and silver

Gold Investment Vehicles

Interested in investing in gold and silver? Here is a primer on the options available for investing in gold......

With gold and other precious metals doing so well in the market investors wonder what investment vehicles are the best to capture the upward appreciation in the precious metals market. Many wish to buy and hold the precious metals themselves. There are certainly a number of different options and each one has its own strengths and weaknesses. This discussion gives some basic information on the most common possibilities. Depending on what your goals are, you may choose to use one or more of the available options described below. I'm not an investment counselor, nor am I offering any investment advice, but here is a brief explanation and introduction to each of the best known opportunities: US and international gold bullion coins The US and many other countries have made and are continuing to make gold bullion coins. These are not coins which are rare and have numismatic value, but are coins made for investors interested in their bullion value. The American gold eagle coin is available and denominations of 1/10 ounce, one quarter ounce, one half ounce and 1 ounce. The great advantage of bullion coins is that they are easily available, liquid and portable. Most coin shops buy and sell them. If you plan to buy small amounts of gold, perhaps half an ounce a month for investment purposes, this is the kind of thing you may be interested in. The disadvantage is that they have a significant cost of getting in and out. It will cost about $25 plus the spot price for 1 ounce coin, and if you sell it you will receive a few dollars less than the spot price. The cost for a buy and sell combined is about $30. Foreign bullion coins, such as Canadian Maples or Krugerrands are slightly less liquid but may also have lower buy and sell costs. There are also one ounce silver bullion coins, which are available with a similar significant cost to buy and sell.
US 90% coin silver Until 1964, all US coinage other than nickels and cents were made of 90% silver. These coins also have a bullion value based on their silver content. You can normally purchase from just a few to a big bucket full, and they are sold both by weight and by face dollar amount - by weight is probably the better deal as some old coins are worn. These coins are available at most coin shops. Like other bullion coins, there is a significant cost to buy and sell. US Gold numismatic collector coins Many investors are interested in gold collector coins. These are coins with a large numismatic (coin collector) value premium in addition to their bullion value. These coins will fluctuate somewhat with precious metal prices, but many times they also contain a significant price premium due to their desirability as collector coins. Sometimes the collector price appreciates significantly, but for those who really wish to invest in the appreciation of precious metal prices, these coins are probably not the best vehicle.
Gold Jewelry Some investors will want to consider the possibility of gold jewelry. Unfortunately, the cost of gold chains, gold beads, necklaces and other similar jewelry is such that a significant premium is paid to buy the gold and jewelry form. For that reason, while gold jewelry may be fun to wear, it usually does not make for a good investment. Bullion Bars Bullion bars of gold, silver and platinum are also purchased by investors. Bars are a popular vehicle and are available in a wide variety of sizes from small to quite large. Hundred ounce bars of gold are available. Bars usually sell and only a small premium to the spot price - with bars it is cheaper to buy and sell. While most coins are issued by governments or other well-known and trusted entities, there are bars issued by little known makers. These little known bars will not sell for a price as high as bars are more well-known maker like Englehard.
Managed PM storage accounts Another option is to invest money with operators who purchase and hold gold or other precious metals on account for the owners. The gold is kept in faults it is not available for delivery. Usually these accounts allow investors to buy and sell the precious metals very close to the spot price. As a result, it is an efficient way to invest, one well worth investigating. Natural Gold nuggets and other specimens Still another possibility is to purchase in whole natural gold nugget or gold in Quartz specimens. Depending on the size, gold content and inherent beauty of these natural pieces prices may vary from only a little above spot to prices 20 times greater than the spot price of the gold contained. Quality pieces are difficult to find and purchase, and usually difficult to sell as well. While these can be very beautiful to own, for those who really wish to invest in the appreciation of precious metal prices, these specimens are probably not the best vehicle.
Exchange traded funds A new and different option available only in the last few years is the exchange traded fund (ETF). In many ways these are similar to mutual funds and shares of ownership are bought and sold through the Stock exchange. However, while mutual funds hold assets consisting of stocks, exchange traded funds hold other items. These can include commodities like oil, corn or precious metals. At present there are a few gold based exchange traded funds and one silver-based exchange traded fund. There are rumors and suggestions that a platinum ETF is being developed. The ETF share prices are tied directly to the price of the underlying metal. Usually these ETF funds allow investors to buy and sell the precious metals very close to the spot price, so it is an efficient way to invest, and generally a good option to consider for those wanting to invest significant amounts of money in the precious metals market. In addition, ETF shares can also be bought on margin or sold short. Your broker can help you in considering these possibilities.
Gold Option Contacts: Puts, Calls Some sophisticated investors will get involved with gold option contracts. These are legal contracts commonly sold to the Chicago Board of trade to purchase lots of gold (usually these contracts are issued in sizes of 100 or 1000 ounces). A call contract allows you to purchase gold at a set price for a fixed length of time, so if you are able to purchase a call at $700 per ounce and gold goes up to $800 per ounce, you make a profit of $100 per ounce on the ounces in your contract. I'll put works the other way - it is a contract to sell gold at a fixed price, so if you have a put contract for $700 per ounce and gold declines to $650 per ounce, then you make a $50 per ounce on all the ounces in your contract. There are all sorts of complex strategies of buying and selling these contracts such as straddles, etc., but these strategies are far beyond the scope of this discussion. It suffices to say that this is a high risk way to make or lose money quickly.
Dig and Pan your own Gold! One exciting option for those interested in gold is to dig their own! It certainly is exciting and fun to go exploring and dig for your own gold, but until you really learn the ropes it's not likely that you'll be finding large quantities of the precious yellow metal. This possibility is really more valuable for its outdoor experience that it is for the possibilities of sudden wealth. I have prepared a number of pages on prospecting for gold giving just what you need to know to find those beautiful nuggets. You can see an article about it on my website at: THE FUN OF PROSPECTING FOR GOLD Gold Mining Stocks Another possible option to invest in the appreciation of gold is to put your money into mining stocks. These offer an opportunity for even greater appreciation than that of the metal itself, as the companies become greatly more profitable with the increase in precious metal prices. Because trading in stocks is a whole world of itself, I have done up a separate webpage with some ideas to consider if you have an interest in investing in mining stocks. You can see my website at: INVESTING IN MINING COMPANY STOCKS ************************************************ Note**: It is important for you to know that I am not an investment advisor and my opinions here should not be construed in any way as advice. I am an independent investor and these opinions are mine alone. You should conduct your own research for any investments you make, and be aware of any and all risks which those investments present.

Want to know a little bit more about this crazy prospector guy? Well, here's a little bit more about me, and how I got into prospecting: Chris' Prospecting Story Interested in seeing more gold? Here are some interesting photos of beautiful Gold Nuggets

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