Investing in gold is a very lucrative business, but not many people have mass amounts of gold laying around. Whether you’re looking to invest as a way of storing value or as a hedge against inflation, it can be tough and even dangerous to have large quantities of physical gold. Luckily, there are ways to invest in gold without actually having any. If you’re looking to start investing in gold but don’t have any, here are some ways you can get your foot through the door:
Invest in Receipts
Throughout history, goldsmiths would store the gold of members of the community. In return, paper receipts were given to those depositing gold which could be redeemed for their gold at some point in the future. Now, people can still invest in gold receipts that can be redeemed for physical gold. While government mints don’t usually deal privately with gold any longer, you can go to enterprising private “mints” that offer electronic tradable receipts (ETRs) backed by their vaulted gold or even collectible coins minted from precious metals. You can then trade ETRs on an exchange or privately.
Another way to start investing in gold is through gold funds. Many investors can gain exposure to gold through mutual funds that buy gold or they will use gold ETFs, which are traded like shares on stock exchanges. A popular choice for this route is the SPDR Gold Trust ETF (GLD) which objectively aims to have its shares to reflect the performance of the price of gold bullion. Gold funds are more accessible to investors however they tend to be less cost-effective.
Gold Mining Stocks
One of the biggest issues with investing in or holding physical gold is that the metal doesn’t produce any income. Some investors choose to invest in gold mining stocks instead. Gold mining stocks are active businesses. Their prospects are linked to gold prices and mining companies rise when operations are successful. Investors opt for investing in mining stocks because they tend to go up more sharply than gold when prices are rising.