Gold investing has long been a popular option for investors looking to diversify their holdings. The precious metal is actively traded by a number of individuals and institutions, but is also held by a number of other investors as well. It has become a popular safe haven as there seems to be very few safe options left, especially now that the Swiss franc has been pegged to the euro. A gold allocation can also act as a hedging tool in a portfolio, as the metal’s price typically moves inversely when compared to major equity benchmarks, generally offering nice returns when broad markets are slumping [see also The Ultimate Guide To Gold Investing].
Beyond its role as a diversifying agent in a portfolio, perhaps the most enticing attribute that gold offers is the huge potential for price appreciation. Although prices were stuck in somewhat of a rut in the middle part of the last decade, financial turmoil, money printing, and widespread fears over inflation have pushed gold prices sharply higher in recent years to near all time highs. In fact, the price of gold has surged from about $800/oz. in 2008 to their current level, nearly two times that mark. Given the continuation of easy money policies by the Fed and other central banks around the world, as well as the very real possibility of more turmoil in the financial space, it isn’t surprising that many investors are looking to cash in on this modern day gold rush.
For these investors looking to make a play on this elusive metal, we explore every nook and cranny of the investing world to offer 50 ways to play gold:Exchange Traded Funds (ETFs)
ETFs have been instrumental in making a number of commodities more widely available to the average investor and gold is no exception. These funds are designed to offer high transparency, low expenses, and a number of tax advantages to avoid major headaches come April. There are now a wide variety of ETFs that track everything from physical gold bullion, to more complex strategies that hedge equity markets with gold futures in their underlying holdings. Below, we outline a number of viable ETF options for gold exposure:
Some investors may prefer to make a more targeted play by investing in gold stocks. These will most often consist of mining and exploration companies which can offer advantages that other securities on the market cannot match. A number of these individual companies have strong dividend options as well as high liquidity for traders of all kinds [see also Are Gold Miners A Buy?]:
Gold bullion is perhaps the safest and most hassle-free way to maintain gold exposure. The biggest issue when holding physical bullion comes from purchasing the metal itself, which can run up costs exponentially depending on the amount that someone wishes to purchase. Gold bullion allows an investor to know exactly where their money went, what it is worth, and immediate access to the metal should they ever need it. For those that can afford to purchase physical bullion, your only real worry is where to store it and keep it safe [see also Three Reasons Why Gold Is Overvalued]:
Futures were the original method for obtaining exposure to commodities. These contracts can be difficult to understand and require a rather complex futures account, so they are not meant for the average investor. For those who fully understand the nuances of these contracts, futures can be one of the most powerful trading tools for an investor, as they offer exposure that, in some cases, can be found nowhere else in the market. The following futures are offered on the COMEX via the CME Group [see also Three Ways To Play $2,000 Gold]:
Mutual funds have long been one of the most popular ways to gain exposure to a number of assets. They are something of dinosaurs when it comes to investing, as a number of funds have long successful track records that other securities simply cannot compete with. The mutual fund space has tens of thousands of options and a number of those offer exposure to gold. Perhaps the biggest draw to this sector is the high dividend yields that a number of mutual funds tend to offer. Investors should note that most of these products require minimum investments in order to discourage less-serious, and ultra-small investors [see also Dividend Special: Top Companies In Every Major Commodity Sector]:
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Disclosure: No positions at time of writing.