Investing in gold is one way of protecting yourself against crises that may be brought about by economic or political instability or social unrest.There are at least six ways of investing in gold:
Buying gold bars
Buying gold bars is the most traditional way of investing in gold. There are bullion dealers that provide this kind of service. Gold bullion coins and bullion gold bars can also be bought or sold over the counter in most Swiss banks, or in major banks in Liechtenstein and Austria. Gold bars however are becoming less and less an option among investors due to some of the difficulties such as; verification process, transportation, and storage, associated with them.
Buying gold coins
Buying gold coins is the most popular way of investing in gold. Gold bullion coins are typically priced based on their weight; a premium is added to the gold spot price. Gold coins may be bought or sold over the counter in most Swiss banks.
How to open a gold account
Gold accounts are offered by most banks in Switzerland. This is where gold can be bought or sold in much the same way foreign currencies are dealt. A gold account is backed either through non-fungible (allocated) gold storage or pooled (unallocated) storage.
Owning a gold certificate
Gold investors may opt to hold on to a gold certificate rather than store the physical gold bullion. Gold certificates allow the investor to buy and sell the security and eliminate the many difficulties associated with the transfer of the actual gold material.
Entering into a Contract for Difference (CFD)
Some financial services firms, especially those in the UK, provide something called a Contract for Difference (CFD). In this gold investment vehicle two parties enter into a contract. In this contract, the seller agrees to pay the buyer the difference between the gold’s current value and its value at contract time. In cases where the difference is negative, the seller receives payment instead from the buyer. A CFD allows an investor to take advantage of long or short positions, enabling him to speculate on these markets.
Additionally, an investor may buy gold early in conditions where there is increased investor confidence. The investor then sells the gold before a general decline in the stock market sets in. In this and all cases, the investor's goal is to gain financially.
Trading in Gold Exchange-Traded Funds (GETFs)
GETFs are a good means of gaining exposure to the price of gold, minus the inconvenience of storage. Trading in GETFs is like trading shares in the New York Stock or London Stock Exchange. Gold Bullion Securities, the first GETF introduced, stood for 1/10 of an ounce of gold.
Trading in GETFs involves payment of commission and annual storage fees. The handling expenses incurred are charged through the selling of a certain amount of the gold as represented by the certificate. Over time the amount of gold in the certificate decreases.
