Can Amateurs Make Money from Gold?

Can Amateurs Make Money from Gold?

The precious metals market looks undeniably tempting. Despite doom and gloom across most of the financial landscape, it has outperformed practically every other investment option over the past couple of years, including the Dow Jones, the FTSE-100 and even the real estate market.

There is, however, a perception that investing in gold is something for the professionals. Indeed, many small or private investors would not know where to start.

Where to buy gold

Purchasing physical gold is simpler than you might think. It does not necessarily mean buying those hefty gold bars that are so much beloved of Hollywood directors. Instead, Golden Eagle coins are an attractive and highly portable alternative. They come in a variety of sizes and styles, with the one-ounce coins being among the most popular. The point is that gold can be bought in the form of coins or bars ranging from one gram (around 0.035oz) to 1Kg.

Storing your gold

It goes without saying that gold is valuable, but it can still come as something of a surprise when you realize just how much a tiny coin can be worth. A single one of those ever-popular one ounce gold coins, for example, is worth around $1,400. Clearly, you need to keep your gold safe, and storing more than a small quantity in your home is likely to be a high-risk strategy that could invalidate your homeowners insurance.

There are companies that will not only purchase the gold on your behalf, but will also store it in their personal vaults. For anyone considering a serious investment in those 1 Kg bars, this is clearly an option worthy of serious consideration. However, for those simply purchasing some gold coins, part of the pleasure is in the physical possession of such beautiful pieces, so the advice is to protect them well, store them safely and notify your insurer.

Making money from gold without buying it

It is also possible to make money from gold without physically purchasing it. There are a couple of ways to go about this. Most financial service providers can help you invest in an exchange traded fund (ETF). This is essentially an investment fund that tracks with the spot price for gold. It gives a great opportunity to take advantage of gold’s increasing price without physically investing in the precious metal.

Another option is to invest in mining assets. There are a few stocks around the world that have soared in value over recent years. Of course, if you take this option, there is an increased level of risk, as the health of your stock depends on the fortunes, success and strategic abilities of the company itself, as well as the price of gold.

Volatility

Gold is seen as a safe haven because in the long run, it holds its value and steadily appreciates. However, it is as prone to short term fluctuations and volatility as any investment. This means you need to be prepared to play the long game and weather any short-term storm. If you are seeking to make a quick buck, there is a greater risk of getting your fingers burned and you are better looking elsewhere.

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