Before buying gold , it is important to understand some of the factors that make the yellow metal an unmatched asset and different from any other:
- Newly minted coins are typically 90% to 99% gold.
- Gold does not provide any income stream unless you own stocks or mutual funds that pay dividends goldco review.
- Having shares in gold mining companies or companies related to gold does not give the right to own ownership of this metal.
- Storing physical gold may incur a cost.
- While current supply is limited, as the price increases it makes further extraction economically viable, which could increase supply.
- Since much of the metal is not used for any economic purpose other than the creation of jewelry, demand is not a function of true need.
- Due to the concentration of gold reserves in a few governments and central banks, gold is subject to significant price volatility when these institutions decide to buy and sell gold.
- Investing in gold is not like buying stocks or bonds. You can take physical possession of gold by purchasing gold coins or gold bars . Bullion is gold in bar form, with a hallmark. The seal contains the level of purity and the amount of gold contained in the bar. The value of the bullion or coin comes from its composition of precious metals and not from its rarity and condition.
You can also buy shares of gold mining companies, gold futures contracts, exchange-traded funds (ETFs) that invest in gold and other financial instruments related to this metal. If investors buy a gold-backed ETF, they are buying shares in the ownership of a gold fund, but they do not have a claim to the physical gold itself.
Investing in gold with the idea that it never loses value is the wrong approach. Like any investment or financial asset, gold is subject to supply and demand pressures that cause its price to fluctuate.
