With the world financial markets in apparent meltdown, banks reviled and share traders running for cover more and more people are looking to gold as an investment. With the old adage ‘you can’t go wrong with bricks and mortar’ seemingly dead in the water because borrowing has become so difficult, gold is seen increasingly as a safe bet for squirreling away your money. Thus has it always been. Gold is a traditional ‘safe haven’ in times of financial unrest and with world governments printing vast amounts of money to prop up their economies, gold has never looked so inviting.
As an obvious consequence to all of this interest in gold, prices have been through a series of highs throughout 2010 to 2012. At the time of writing gold is sitting at over £1,111 per ounce. Check out the current live prices at goldprice.org
Of course, the more publicity that this attracts, the more people are seeing investing in gold as a safe concept. This raises the question of whether or not we are at the top of the market. Some commentators are suggesting that we are but most of the chatter on financial forums and in the financial press would suggest that gold is still a viable option and a sound investment for the long term.
So how do you invest in gold?
There are a number of methods to invest in gold. The principle vehicles for this are:
Investing in stocks and shares has always carried a higher risk than investing in liquid commodities. It is also worth noting that gold mining companies have not performed as well as actual gold over the last few years (gold mining output actually peaked in 2003). All of the main players in the financial markets offer gold based funds. One that is worth noting, and one that is regularly recommended in the financial pages, is the Blackrock Gold & General fund (previously the Merrill Lynch Gold & General). This fund invests for the most part in the shares of gold mining companies;
Exchange Trade Commodities (ETCs)
ETCs are a passive investment, somewhat like a tracker fund. This is about as direct as you can get to the commodity without actually buying the gold. In essence, your ETC will track the rise and fall of gold prices on the world markets and perform accordingly. ETF Securities specialise in ETCs and offer a couple of investment options. You can purchase a physical gold fund – (PHGP) or you can track the spot price via Exchange Traded Gold, an initiative backed by the World Gold Council;
Bullion and coins
With bullion and coins you get to actually own and hold the gold, although most investors opt to pay for safe storage with the dealer. There are literally hundreds of gold coins to choose from. Most popular are Sovereigns and Krugerrands. Sovereigns are of particular interest in the UK where they are exempt from Capital Gains Tax. Buyers should beware of charlatans. Only use a reputable dealer. There are two good sources of approved dealers: the World Gold Council publish a list, as do the London Bullion Market Association.
There are many ways to invest in gold and it seems investing in gold is set to continue in popularity as a safe place in times of turmoil. However, with the current state of world finance entering uncharted territory, perhaps the best bit of advice we can give you is – don’t put all your eggs in one basket.