Thursday, November 8, 2012

6 Ways To Invest in Gold

Merk Investments LLC has published a report entitled "How to Invest in Gold: Six Options to Consider" (PDF) which provides 6 ways to invest in Gold:
  • Gold Mining Stocks - They describe Junior and Majors mining including the different risks profile, and the need to clearly understand to company before investing
  • Gold Mining Funds - Easier to invest than Gold Mining Stocks, but fund managers charge a management fee. Neither Gold Mining stocks and funds give direct exposure to Gold.
  • Paper Gold - ETN are a convenient way to get exposure to Gold, but the risk comes with the issuer creditworthiness. Leverage ETN are risky investment which should only be used by speculators.
  • Open-End Gold Trusts - GLD, IAU, and SGOL are part of this category. This type of investment gives you fractional ownership of Gold and expenses are low. However, make sure to read the funds prospectus to check it does not use derivatives and see if it allows physical delivery.
  • Closed-End Gold Trusts - You get physical gold exposure, but it can be costly. There may be tax advantages to using this kind of investment.
  • Physical Gold - Namely Gold bars and coins.Pain attention to the premium paid (including shipping and insurance costs) . You'll have to find a way to store it safely, and there is the risk of purchasing counterfeit bars and gold. Buying from reputable dealers might help, but it's not a 100% guarantee.
You can read the PDF file for complete details.