In general, investors looking to invest in gold directly have three choices: they can purchase the physical asset, they can purchase shares of a mutual or exchange-traded fund (ETF) that replicates the price of gold, or they can trade futures and options. in the commodities market.
Gold has been a symbol of wealth since ancient times and even in the Information Age has managed to maintain its relevance as an investment.
In its physical form, currently, around 190,000 tonnes of Gold are available globally out of which 50% is in the form of jewellery. An additional 17% and 13% of global gold reserves are held by Central Banks around the world and used for various industrial purposes respectively.
An increasingly common way of accessing the gold market is Internet Investment Gold (IIG). Internet Investment Gold allows investors to buy physical gold online, have it stored in professional vaults and take possession of it should the need arise. As such, Internet Investment Gold offers benefits such as outright ownership of physical gold, exposure to gold as an asset class, while being highly convenient.
Physical Gold.
Gold is a chemical element with the symbol Au (from Latin aurum ‘gold’) and atomic number 79. It is a bright, slightly orange-yellow, dense, soft, malleable, and ductile metal in pure form. Chemically, gold is a transition metal and a group 11 element.
Gold ETFs (Exchange-Traded Funds)
A Gold ETF or Gold ETF investment is a mutual fund that invests in assets like Gold and is based on commodities. Like individual stocks, these Exchange-Traded Funds function and are traded on the stock exchange.
Gold Mining Stocks.
Gold stocks are shares in gold which an individual owns in a gold company, either a mining corporation, gold Mutual Funds or Exchange Traded Funds. It basically means that you own a certain part of the company and you are entitled to any profit that comes out of your investment in the gold stocks.
Gold Mutual Funds.
Gold mutual funds are open-ended investments, based on the units provided by the gold Exchange Traded Fund. As the underlying asset is held in the form of physical gold, its value is directly dependent on the price of this precious metal.
Gold Derivatives.
A gold derivative is a contract between a buyer and a seller that wants exposure to the physical gold price. They have many useful applications for those involved in the physical bullion business such as price discovery and price risk management.
Gold Funds of Funds.
A gold fund is a type of mutual fund scheme that invests in units of ETFs (Exchange Traded Funds) of gold. It is an open-ended investment option that does not require you to open a demat account, as the investment is made in units of gold ETFs.
Gold savings plans
Regular gold savings plans allow customers to build gold holdings by making periodic purchases, for example on a weekly or monthly basis. Providers of gold savings plans safely store customers’ gold on their behalf and these plans are typically targeted at mass market consumers because both minimum investments and regular savings amounts are low.
Customers pursue different objectives with gold savings plans. Some customers use them to increase their gold holdings in small, regular increments. As such, they focus on the financial benefits of gold as an asset class, using it as a foundational asset, a savings tool or a means of diversification and risk mitigation.
The cost average effect of small, regular investments provides an additional benefit, since the investment is accumulated incrementally over time, the investor is less exposed to short-term price fluctuations.