There are a number of different ways to invest in gold. They include buying: 1. Actual physical gold bullion (called “unparted” gold) like bars, or coins (“parted”) like the American Eagle or the Kruggerand. You can purchase through an online wholesale dealer, who will charge a markup, sometimes considerable, from the ever changing spot price, plus shipping and insurance charges. These wholesalers will also buy gold. There will be tax consequences if and when you decide to sell because your asset is taxed as a “collectible” at 28% v. the usual capital gains tax at 15%. If you purchase in any considerable quantities, there are also storage considerations. 2. There is a brand new twist on profiting from buying and selling physical gold that involves a cost free membership in an affiliate program–also known as a multilevel marketing plan–whereby you can own non US currency gold coins and bullion minted right there at the US’s largest gold mine and receive a percentage of the purchases of others who you have sponsored, at no cost to you or them. Please call mr for more information on this exciting opportunity! 3. Gold Futures: Purchasing a contract for gold at a certain price today for delivery at a certain time in the future, whether you actually take delivery of the gold or sell your future shares prior to due date. This requires buying in quantities of a minimum of 33 ounces of gold per contract and also involves margin accounts. Please seek professional advice regarding futures trading. 4. Gold Mutual Funds: A mutual fund is made up of a pool of many investors (individuals like you as well as large managed funds like pension funds) for the purpose of investing in a basket of similar assets including physical gold and stocks in gold mining companies, but may not be limited strictly to gold assests. Read the prospectus for each fund carefully. Mutual funds are professionally managed at a cost to you and offer a diversified portfolio for the small investor. Toqueville Gold (TGLDX), Van Eck. Oppenheimer, and Franklin Gold Funds are popular examples. The price of a share of a Mutual Fund is fixed for the trading day regardless of what the spot price of gold does. 5. Exchanged Traded Funds (ETFs): relatively new investment vehicle that tracks an index like gold and attempts to replicate it’s performance. It is a proxy that reflects approximately 10% of the spot price of gold, and therefore allows much less investment per share. The price per share of an ETF fluctuates throughout the trading day and can be bought or sold during market hours just like a stock, so it offers more liquidity than a mutual fund. It is unmanaged but does involve an additional (miniscule) cost per share that differs between each ETF. (GLD) is one such ETF. The Important thing to remember about (GLD) is that the gold owned by the fund is indivisible, so you do not actually own the gold your shares represent and can’t take delivery of it. 6. Gold Mining Companies: owning stocks in the companies that explore for and produce hold is another way to gain exposure to gold, but doesn’t necessarily reflect as accurately the spit price of gold as does an ETF. Some miners pay an dividend which is an added bonus to be considered. Which approach is best for you depends on your overall objectives and personal preference.
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