How do I invest in gold as a professional? Top 4 Ways to Invest

How do I invest in gold as a professional? Top 4 Ways to Invest
Gold is respected all over the world for its value and rich history, and it is very logical that people have tended to invest in gold long ago. It is now not only one of the oldest investments but also one of the most popular investment options in the world. What are the best ways to invest in the yellow metal for this year? And how to invest in gold successfully?
The main use of gold is in the production of jewelry, but it is also used in the aviation, medicine, and electronics industries. The governments and central banks are the most buyers of gold. The United States of America has the largest reserves of gold in the world. Germany is ranked second, and the International Monetary Fund is ranked third.
On the other hand, individual investors buy gold for one of three reasons:
  1. Hedging (hedges are investments that offset losses in another asset class)
  2. Safe havens (safe havens protect investors from a potential economic disaster or crisis.)
  3. Direct investment (Investors buy gold to take advantage of future price movements.).

The best ways to invest in gold 2020

Now you know some things about gold and why would individual investors, companies, components and central banks buy it? In this article, we will review how to invest money in gold as a professional through 4 investment options:

1. Bullions and coins

Gold bars and coins are the most common form of possession of gold for the purpose of investment. Gold bullion can be described as totally or almost completely pure gold, certified according to their mass and degree of purity. Gold bars and coins are also linked to a serial number to identify t

2. Gold Funds (ETFs)

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Heavy gold bullion has a beautiful view, but there are some drawbacks, as the ability to liquefy it or exchange it for cash may sometimes be difficult. The gold bars are also somewhat indivisible. So, if you want gold bars that are easy to buy and sell, you can choose the medium or small sizes.
How to invest in gold without actually owning it? Usually investors who want to make profits from gold without actually keeping gold invest in exchange traded funds (ETFs), which are flexible options offered globally. They are investment funds that include a variety of indicators for the gold sector, giving Investors have direct exposure to gold prices without having it This investment is one of the easiest and least expensive ways to access the gold market.
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An investor can buy stakes in gold exchange-traded funds, and one share is equivalent to a certain amount of gold. Investing in gold funds is also beneficial for small investors in terms of reducing risk since the minimum investment in gold funds is one lot.
In an effort to diversify their investment portfolio, some investment funds hold large quantities of gold. However, a very small number of mutual funds invest only in gold. Funds like ETFs only track gold mining companies' indices, and thus charge lower expense ratios on mutual funds. However, most investors prefer to invest in gold ETFs and gold mutual funds as an alternative option to buying gold bars.

3. Shares of gold mining companies

Investors can buy gold from major banks, and gold is not transferred from them to avoid security risks. Rather, it is done through paper contracts, and India, China, England, Turkey and Italy are famous for this market.
How do I invest in gold indirectly? Some consider that direct investment in gold does not include growth potential, as an ounce of gold today will always remain an ounce of gold. This is why some investors are turning to shares of gold mining companies and mines because they can expand over time, investors can benefit from the increased production.
The shares of gold mines and mining companies do not necessarily move in line with the prices of gold bullion, but rather move according to the performance of the companies and mines, as they rise or fall depending on their operational performance and how their money is invested and profits. Thus, investing in mining company stocks is not without risk. For example, mines do not always produce quantities of gold as expected, and workers sometimes strike, and disasters may lead to a mine collapse or a deadly gas leak to halt production and even cost lives.
In general, stocks of a gold miner or mining company can perform better or worse than the price of gold - depending on what is happening in that particular mine. Therefore, the decision to invest in mining shares should be based on an analysis of the company's financial performance.
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4. Gold futures contracts for gold

How do I invest in gold as a veteran? A futures contract is an agreement between two parties to buy and deliver a commodity such as gold at a specified time in the future. In fact, the first futures contract was written in 1851 for a commodity corn and was introduced through the Chicago Mercantile Exchange. Futures contracts are an important alternative to traditional means of investing in gold such as bullion and gold coins. Futures are a highly leveraged and risky option that is not suitable for beginners. Even experienced investors should think twice here. Essentially, a futures contract is an agreement between a buyer and seller to exchange a specified amount of gold at a specified future date and price. As gold prices go up and down, the contract value fluctuates, with seller and buyer accounts adjusting accordingly. Futures contracts are generally traded on exchanges, so you will need a (brokerage firm) to support the purchase of gold futures contracts.
Futures contracts are usually purchased for only a fraction of the total contract cost. For example, an investor may have to pay only 20% of the full contract cost. This creates leverage, which increases the potential investor's gains and losses. And since contracts have specific expiry dates, you simply cannot hold on to a losing position and hope that the price will rebound. Futures are a complex, time-consuming investment that can amplify gains and losses alike.

How is the price of the yellow metal affected?

In addition to gold being subject to the law of supply and demand like any other commodity, it is also subject to the price movement and behavior of investors and traders in the financial markets. In contrast, unlike paper currency, which suffers from inflation and erosion of its purchasing power, gold is not subject to inflation and its value is fixed, and production and mining operations do not greatly affect its price and value. Therefore, investors protect themselves against inflation by purchasing gold as a store of value.
The demand for gold always increases in times of turmoil and economic crisis because investors are looking to protect themselves and turn to the king of safe havens.
Central banks are also a major factor behind the price of gold, especially when foreign exchange reserves become full, as the central bank begins disposing of some gold because it is a non-productive asset and does not generate any return to the economy.
The relationship between the price of gold and the strength of the US dollar is an interesting one. The lower the price of the dollar, the higher the price of gold, and the higher the price of the dollar, the lower the price of gold.

How do I invest in gold successfully?

If you are buying gold as part of your portfolio diversification strategy , then ETFs are the best option. If you want protection in the event of an economic crisis or any turmoil that may threaten the financial and monetary system in your country, you will need to own real gold, not stocks or paper gold.
You should not buy gold as your only investment, because gold itself does not produce any value, and its price can have high peaks and low lows, and this makes buying gold as a single investment risky for the average individual investor .. Therefore, gold must be included with other commodities such as oil, commodities and investments in Other fixed assets.

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