A significant amount of attention has been given to gold in the past year due to impressive prices. In fact, professional financial advisors and investment portfolio managers have strongly encouraged clients to maintain a portfolio of gold between 5% and 15%. The exact amount would depend on a person’s goals both short and long-term but whether investing in actual gold metal, gold mining equities, or gold ETFs, there is tremendous value at the present time.

We wanted to provide both pros and cons of investing in gold to help in making an educated decision. Obviously, being able to weigh out the good and bad of the three opportunities mentioned increases the odds of seeing a great return on that investment.

Investing in Physical Gold Metal

For starters, when it comes to physical gold metal, there are a number of investment possibilities. The most common include bars and coins but another option would be the investment of gold bullion in the form of what is known as a pooled account. For this, the investment would involve a special type of savings very similar to a mutual fund but along with this, actual gold could be purchased but without the responsibility or inconvenience of storing it.

To better understand the different options with physical gold, as well as the pros and cons of each, the following information would prove highly beneficial.

• Buying and Storing – Being able to have control over a tangible object makes most people who get involved with gold investment feel secure but with this comes risk of getting rid of the gold should the market collapse, not to mention theft. Therefore, the upside is being able to personally manage the gold with the downside having trouble liquidating it if needed or keeping it 100% safe.

• Buying but Not Storing – The alternative would be investing in physical gold but not carrying the responsibility of storing it. Referred to as a “middle way”, gold would be in the buyer’s name but stored in a secure vault. The benefit of going this route is that along with dealers and brokers offering storage, they also cover the associated cost and provide insurance. The positive aspect of this is having the ability to liquefy the gold quickly and easily but the negative is the high cost of the dealer or broker holding the gold.

• Pooled Accounts – For this, you would purchase a specific amount of gold that would be stored by the dealer or broker in a safe and secure location. If wanted, you could take physical control of the gold but if not, it would serve as a type of collateral to the dealer or broker that once sold monies due would be paid back. On a positive note, the gold would be maintained in a secure location but the negative is not having quick access. Additionally, some dealer and broker fees can be high so finding the right person or organization would be critical.

Investing in Gold Mining Equities

The second possibility when it comes to investing in gold via gold miners, gold explorers, and a variety of gold stocks. For people that want to avoid paying monthly account fees, issues of storage, insurance coverage, and so on, this option is viable. In this case, the investor would need to have a trusted broker that could set up the chosen account. Although not always, there are instances in which dividends would be paid on gold stocks when choosing gold mining equities.

The following are the pros associated with gold mining equities:

• Market Diversification Regarding gold mining equities specific to market diversification, while value could fluctuate compared to physical gold metal, looking at the future and potential for gold prices dropping, the over or under value of market diversification investment could balance things out.

• Asset Diversification – To offer cushion to hedge and stock specific to gold prices, gold producers can help but the flip side is risks that go along with stocks that sometimes appear unexpectedly.

• Liquidity – The benefit of gold stocks is easy buys and sells for the most part. Of course, when sold on the open market, the process would be less complicated than working with a dealer.

The following are the pros associated with gold mining equities:

• Stocks – When it comes to gold stocks, there is a difference with equities although a direct link to commodities is clear. Unfortunately, commodities are considered as volatile so therefore, risky.

• Companies – Another consideration associated with investing in gold as equities is that dealing with a number of individual companies brings risk, specifically management risk. If any of the companies were to experience some type of lawsuit, major management choice or decision, political upset, or something else then the investment could struggle.

Investing in Gold ETFs

The last of the three methods of investing in gold has to do with ETFs. While some investors view ETFs has the medium between actual gold bullion or coins and gold equities, it would be critical to understand the varieties of ETFs. For example, some ETFs involve physical gold while others involve trade. Then on a more advanced level, leveraged gold ETFs would also be an option.

One of the greatest benefits and disadvantages of ETFs include the following:

• Although benefits would depend on the exact type of gold ETF investing in, overall there would be no insurance to pay, no account fees, and in the case of bullion, it could be stored safely in a vault. The only real consideration is that for someone interested in a dividend, as well as owning equities, then an equity ETF would be the way to go.

• The downside to gold ETFs is the exorbitant cost of management fees. In addition, when buying and selling, commission fees would apply. Additionally, because companies are involved there would be some market risk along with management risk based on the way the ETF were being handled.