Although we could go back to the beginning of time, we wanted to focus on gold prices and how they have changed over the past seven years. Considering there was significant change during this era, we felt it would be the most impacting.

Washington Agreement

To begin, the Washington Agreement was signed back in 1999 when the gold market was threatened by uncertainty surrounding possible sales of central banks but also the mass mining of gold, as well as gold as a commodity. The other thing seen at that time was future production being hedged, which in turn affected output. This meant that gold prices were much higher than what experts had anticipated.

From that time forward, gold prices have been making steady progress with one of the primary changings being with the sales of gold through central banks. Any fear of unexpected sales was squelched with limits of gold sales being established. Keep in mind that at that time, speculative fund dominating the market coupled with hedge determined gold prices, which caused serious fluctuation.

Gold Prices in 2006

One of the bravest changes came by central banks due to Italy and Germany insisting on holding onto gold as a way of countering the US dollar. In addition to becoming a key component of central banks’ reserves, this caused sales of gold to drop by 51%, leading to the Central Bank Gold Agreement. While central banks saw a significant decline, other banks were beginning to purchase gold. Even so, those involved with this Agreement saw gold sales lower than anticipated.

The main problem that central banks faced was if gold was purchased in large amounts, gold prices would skyrocket. Even so, for central banks, wealthy people, and corporations, gold as an investment was recognized, causing the market to experience continued change.

Changes in 2007

Then in 2007, gold prices dropped in part due to imports to the Middle East declining by as much as 50%, along with other countries. However, gold was still in high demand as gold jewelry was a hot trend. In fact, scrap gold being used for jewelry production climbed approximately 34% but even with this, the gold market had a cloud hanging overhead. At that time, it was realized that gold for investment purposes needed to take the lead over jewelry demand for gold.

Eventually, higher gold prices did attract organizations and wealthy people who wanted to add gold to their long-term wealth portfolio. It was at this same time that potential dangers associated with the US dollar along with other paper currencies was realized by central banks, pushing the gold market to a much better position.

Gold Prices in Today’s Market

Gold is interesting because while its value has always been considered stable, even when fluctuations occurred, it has seen some incredible highs and lows. By going through the bad times and seeing where mistakes were made, banks, individuals, and corporations understand that whether held in reserves or portfolio investments, this is one precious metal that will always provide stability and security for the future.

The change specific to gold prices being enjoyed today actually started in 2008 when prices began to increase. While there have been a few bumps in the road along the way, all of the changes have brought us to where we are now. For instance, at the beginning of 2009, the annual change in gold prices in connection with the US dollar was 23.4%, in 2010 it rose to 27.1%, and so far in 2011, the change is 22.3%, all increases.

Examples of gold prices per ounce for different types of investments in the current market include the following. However, it is important to remember that the price will continue to climb through 2015 according to experts.

• Gold Bullion – $1,791.63
• Krugerrand Gold Coins – $1,791.70
• Canadian Gold Maple Leaf – $1,798.90
• American Gold Eagle Bullion Coins – $1,798.51

When it comes to buying and selling gold and other precious metals, investors need to rely on a reputable, dependable, and fair resource. Although there are many companies that offer this very service, one stands out from the competition. Bullion Direct is an online source whereby investors can go to buy and sell physical gold, as well as other forms of precious metals to include silver, platinum, and palladium bullion and coins.

In addition to trading the most coveted products such as South African Krugerrand, American Eagle, and Canadian Maple Leaf, Bullion Direct also deals with Swiss Gold Bars, Austrian Philharmonic, Engelhard, Chinese Panda, and Johnson-Matthey silver bars, among others. With unrivaled services, years of experience, and tremendous knowledge, it is no wonder that so many people prefer working with Bullion Direct for the purchase and sale of gold and other precious metals.

Bullion Direct History

This precious metal trading company has a long and stable history that began in 1999. At that time, Bullion Direct was formed as a privately-held corporation in Texas with the purpose of developing, deploying, and operating a special business for investors. However, the vision of becoming a hub for order matching of precious metals was actually conceived years before the company was founded with an essential system that would become known as Nucleo.

Because of the internet’s power and reachability, it became clear this would be the ideal medium on which to launch services provided by Bullion Direct. In 2000, investors were provided with a one-stop-shop for trading gold and other precious metals efficiently, conveniently, and innovatively. The dedicated team of professionals possesses incredible knowledge and expertise associated with the precious metals sector and has completed in-depth training and education to operate state-of-the-art technologies necessary for all Bullion Direct services.

The primary benefits of buying and selling gold, along with other precious metals through Bullion Direction include the following:

• Transactions occur in real time

• Buying and selling is done in a real order market

• The company offers services and provides assistance to individual investors, as well as professional institutions on all levels

• Comprehensive services include trading, purchasing, clearing, storage, and insurance for physical gold and other precious metals

• Customers of Bullion Direct have complete confidence in services and support offered, as seen in the company’s continuing growth and demand for assistance

Bullion Direct Services

This organization offers a number of comprehensive services to include those listed below:

• Catalog – Using a real-time catalog via the internet, investors have the opportunity to browse through brands and types of metals. Everything listed in the catalog is of high quality, orders can be placed 24 hours a day and 7 days a week, and the system provides customer access to order status information through an established portfolio account.

• Matching – Another unique service provided by Bullion Direct is matching exchange, again with transactions completed in real time. Best of all, the complete transaction is facilitated by an expert who provides authentication of the product chosen, processing of payment for the purchase or sale, delivery of the product, and fulfillment of the order.

• Self-Directed IRAs – Authorized IRA custodians with Bullion Direct also offer self-directed IRAs. To benefit from this service, customers would simply open an IRA trading account after which time rollover funds or tax-deferred IRA investments could be traded to physical gold or other precious metals. The system is easy to learn thanks to an online IRA Overview.

Bullion Direct Storage

In addition to providing a platform on which investors can buy and sell precious metals, Bullion Direct provides storage, something not all online trading companies offer.

• Free storage is provided, making it possible for investors to accumulate orders within one portfolio from the catalog and/or exchange. As a result, customers save money on shipping and handling charges that would be tacked onto separate deliveries.

• Although precious metals are not separated for individual customers, by maintaining precise accounting systems all products are allocated to the appropriate customer account. However, investors do purchase individual gold or other precious metal products opposed to pool metal.

• Because stored products are not Bullion Direct assets, customers have an extremely high level of protection

• For customers that need or prefer long-term, allocated, or segregated storage, physical delivery of bullion or coins is possible to an independent storage facility of the customer’s choosing to include a personal safe or vault, a safe deposit box maintained at a bank, trust company, or some other financial institution, or depository through a number of respected companies such as HSBC, Brinks, or Delaware Depository, simply by making a request. However, proper authentication and quality control are not the responsibility of Bullion Direct for any independent storage option.

Bullion Direct Insurance

• A Lloyd’s of London insurance policy is maintained by Bullion Direct as a way of providing investors with protection although fulfillment of obligation and order would remain the full responsibility of Bullion Direct

• All facilities, as well as transportation companies and practices for shipping and handling are covered by the company’s insurance policy with Lloyd’s of London

• While transactions associated with Bullion Direct would be covered under the Lloyd’s of London insurance policy, actual customers are not

Throughout time, gold has been coveted, a precious metal that represents wealth and prosperity. Today, gold is still viewed in this same manner although it is also used as a means of achieving financial stability and security, especially during rough economic periods. When the right investment is chosen and managed appropriately, solid yield would be expected. In fact, of all possible investments, gold remains the number one choice for people around the world.

Pros of Gold as an Investment

• Strong Market Potential – There will always be a market for gold. Regardless of the type of gold investment or the amount purchased, avenues for selling will always be available. Because the price of gold rarely experiences dramatic fluctuations, something commonly seen with other types of investments, it is the safest of all investment possibilities due to stable and consistent supply and demand.

• Strong Return on Investment – Profits associated with trading gold short-term makes it possible to capitalize on gold price increases

• Security – Gold as an investment provides people with a sense of financial security, something essential considering the past and current economic and political conditions

• Financial Protection – When an investor’s portfolio is comprised of 3% to 5% gold, it offers protection of wealth

• Value Retention – Despite periods of inflation, market issues, and even political challenges, gold has historically maintained value

• Investment Opportunities – Gold investments come in many different forms to include physical gold comprised of bullion, coins, and jewelry, as well as certificates, Exchange Traded Funds or ETFs, and futures and options. Therefore, opportunity for investors exists regardless of experience.

• Low Risk – While there are some types of gold investments that carry risk, overall gold is not a liability because economic and government policies have no impact as seen with other investment options

• Trading Options – Investors have the option of trading gold short-term or using it as a part of a long-term portfolio to achieve and protect wealth

• Storage and Durability – Whether in the form of physical gold or stocks, gold investments can be stored in a personal safe within the investor’s home or office, in a safe deposit box within a bank or other financial institution, or in a vault managed by a gold broker or dealer. In addition, when gold as an investment is in the form of physical gold, concern over degradation is never an issue. Additionally, unlike other types of metals, gold will never corrode, erode, tarnish, or perish in any way.

• Incredible Value – The value of gold has risen by an impressive 150% since 2001 with experts predicting value will continue to rise over the next 10 years

• Stability – Unlike stocks that can drop to zero, gold will always retain some degree of value, even in tough economic times

Cons of Gold as an Investment

Along with positive aspects of gold, there are potential risks that must be understood and planned for. With gold investments, two specific types of risks exist to include liquidity risk and market risk, which are addressed below.

• Liquidity Risk – With this, potential risk would exist when an investor wanted to sell gold only to have trouble finding a qualified buyer. Now, demand for gold is high around the world so this risk is considered low yet something to consider. Today, trading occurs 24 hours a day and there are various types of buyers but there could be periods or situations in which selling might present a challenge.

• Market Risk – The second type of risk that gold as an investment might experience is associated with the market. However, with gold prices, risk would be in short-term scenarios if a serious investor were interested in liquefying a significant amount of gold quickly. In this case, the price of gold might be affected short-term but due to production of gold being so stable, equity returns would probably not be impacted. Usually, risk increases in a volatile market but considering demand could be met relatively easy due to the large amount of above-ground stock, risk would be low.

In looking at the pros and cons of gold as an investment, it becomes clear that benefits far outweigh downfalls. Again, understanding potential risks and other potential issues of gold as an investment is imperative but overall, there is no other investment opportunity that performs like gold.

With the various options for buying gold, the current price for gold so high, and the future of buying and selling gold looking great, it is easy to see why so many people have jumped on the bandwagon to investment in this precious metal. However, to be successful as an investor, whether on a small or large scale, it would be imperative to understand the gold investment market and adopt appropriate strategies.

Unique Strategies

Gold investment strategies are not always the same for every investor. While some dynamics might be shared across the board, the actual plan developed would be based on a number of factors to include the investor’s personal goals, the amount of money being invested, the type of gold investment, and long-term goals. While some people can determine the best strategies for gold investment on their own, keep in mind that if needed, a professional in the industry could offer suggestions or provide guidance.

Type of Gold Investment

When it comes to investing in gold, you have several viable options. For instance, you could purchase physical gold available in bullion, coins, and even jewelry. There are benefits of each but again, several factors would help determine which one is right for you. While many people just getting started choose to purchase small amounts of physical gold, we want you to consider another strategy for successful gold investment.

If wanting to be sensible in the approach taken for gold investing, you should think about purchasing a small stake in an ETF or Exchange Traded Fund. For this, the ETF should be own shares in about multiple companies, all associated with the gold industry. While there are several possibilities, one considered a solid strategy is called the Market Vectors Gold Miners, which is traded within the United States under the GDX symbol.

Physical Gold versus Equities

Another area in which strategies for gold investment would be critical is with equities. For starters, when it comes to wide price swings, these typically affect raw materials but for company equities, dramatic price fluctuation is more common than with physical gold. Even if you were a big time gold investor, it would be important to investigate equities of companies prior to buying.

Another strategy that has worked quite well is choosing index funds over company stocks when looking to add some degree of gold equities to a wealth portfolio. However, the type of index fund that is preferred is the ETF. In this case, the investor would be protected to a certain level from risk of being completely wiped out should any of the index fund companies go financially bankrupt.

Gold Allocation

Financial advisors, gold dealers and brokers, and other experts specific to gold investment see the same mistake of people not allocating the right amount of gold to a wealth portfolio made time after time. Overall, your portfolio should have between 3% and 5% gold at any given time although when investing on a large scale, this level could increase to as much as 20%.

While we see a greater number of people getting adding gold investment to a portfolio, the amount is typically not high enough or it ends up being too much. As a result, the portfolio becomes unbalanced, which ultimately makes it risky. Obviously, when looking at different strategies associated with gold investment, the goal everyone wants to achieve is making a significant profit, whether short or long-term.

Primary Benefit of Gold Investment

There are actually many benefits that go along with gold investment but just as strategies are unique to each investor, benefits also vary. Of all benefits, the one that gets most people excited about the potential of investing is the stability and security to get through tough financial times virtually unscathed. While some people invest in gold as a way of leaving family with something of value after death, most want a sure thing to fall back on when the economy fluctuates.

In keeping track of selling and buying prices for gold, as well as fluctuations occurring in value, investors use a variety of tools such as the gold price chart. Obviously, having access to accurate information in a timely manner is one of the ways in which investors make a profit. One of the mistakes seen in newer investors is buying gold in one form or another and then sitting back expecting the investment to manage itself.

Although there is not a lot that needs to be done with gold because of it being such a solid and consistent currency, investors still need to know what is going on with investments of which their wealth portfolio is comprised.

Hardcopy versus Online

When it comes to getting hold of a gold price chart, investors have two main options. First, this type of chart could be obtained in hard copy but the more beneficial option and the one preferred is by getting a gold price chart online. For this second option, there are several websites that offer a free live chart. In this case, there are several benefits. Pulling up a gold price chart online makes it possible to find gold information conveniently, privately, and in real time.

Although each company that provides an online gold price chart operates slightly different, overall systems work in much the same way. As an example, after visiting the site of choice, an investor would be able to look at both gold and silver prices in many national currencies, to include the United States Dollar. The other currencies typically included are the Canadian Dollar, Australian Dollar, Euros, Pounds Sterling, Japanese Yen, and Swiss Franc.

Along with finding prices for gold and silver, the online business offering a live gold price chart would also have up-to-date information on the Platinum Price and Paladium Price in United States Dollars. This type of service has a number of other services such as exchange rates for all currencies, and even oil prices.

Current and Historical Data

Another benefit of using a gold price chart is that along with having a quick visual of what gold is doing currently charts can be reviewed for historical data. This allows investors to make even wiser investment decisions so ultimately, profit yields are greater. Without the gold price chart, looking over years of information would take forever but these graphs offer a quick visual reference that after learning to read saves a tremendous amount of time and effort.

Learning to Read a Gold Price Chart

A chart such as this is a standard tool used by experienced investors but for someone just getting started in the world of investing, online companies that have a service whereby gold price charts could be reviewed usually provide some type of user’s manual. With this, a wealth of information would be provided specific to the gold price chart regarding how to read the information included.

Along with these user’s manuals is other information, such as charts for other precious metals, as well as special features offered on the site. While it takes a little bit of time to understand the information and system of a gold price chart, before long investors realize its true value.

Obviously, with the information obtained regarding gold price per gram, an investor would have the opportunity to buy, sell, or simply maintain the gold as a part of the wealth portfolio specific to long-term strategy in a more efficient manner. As someone just learning about gold investments, the question of why a seasoned investor would follow gold price per gram opposed to ounce comes up, which is what we want to cover in this article.

Gold Price Per Gram versus Ounce

Although some investors follow gold price per gram, gold is actually quoted in what is termed “Troy ounces”. However, it appears that more people understand grams as a unit of weight than they do this type of ounce used for precious metals. Additionally, a growing number of investors prefer to know gold price per gram opposed to ounce for converting or cashing in.

Although the economy has enjoyed some stabilization in the past few years, uncertainty remains. Sadly, millions of people around the world lost jobs and in fact, new layoffs were just recently announced. Knowing the value of gold by gram helps an investor manage the portfolio better, especially when interested in selling a very small portion of the gold investment.

Accurate Calculations

To determine the value of gold on a per gram basis, numerous online calculators are accessible that give investors quick and accurate information. However, with Troy ounces being used to quote gold, a new investor would need to learn the number of grams in a single Troy ounce. That way, an appropriate calculation could be performed, thereby providing the investor with accurate numbers.

While this seems straightforward enough, many new investors actually make a mistake at this point. The reason is that the true meaning of a Troy ounce is not what the average person equates to an “ounce” as most people think of it. The type of ounce used for cooking is officially called an Avoirdupols ounce whereas a Troy ounce is completely different and used specifically for weighing gold, silver, and other precious metals.

Actual weight between the two types of ounce measurements is very different. For instance, four ounces of milk using Avoirdupols ounces would be different from four ounces of gold using Troy ounces. Although the difference is slight, it still exists. With a Troy ounce, the number of grams is 31.10 whereas for Avoirdupols ounces, the number of grams is 28.35. The bottom line is that to keep track of gold, make selling easier, and to end up with accurate value, investors prefer to get a gold price in grams.

Looking back in history, the price of gold has always been the bottom line. Although the price of gold in older days was nothing like we see today, millions of men and even some women panned for gold 10 to 16 hours a day, seven days a week with dollar signs always in the forefront. Today, buying gold at the best gold spot price possible is the goal of every investor, whether purchasing coins or bullion for a family legacy or long-term profit used to buy and grow businesses.

Time to Invest

If you have considered investing in gold but for one reason or another keep putting it off, you need to understand that every day you do not purchase gold you are actually losing money. With gold being at an all-time high, people around the world are locking into the highest gold spot price. After delivery, the method of storage and the time the investment is held would be a decision made on a person-by-person basis but the key is to start the process of building a wealth portfolio with buying.

In April of this year, two incredible things happened specific to precious metals. The first was seeing silver reach the highest ever at $47.73 an ounce. While this along was impressive, it was nothing compared to what gold did. At this same time, the price of gold hit $1,508.20 an ounce, the highest value ever recorded in history. You can only imagine what people from the California and Victorian gold rushes would think if mined gold at that time had come anywhere close.

Gold Compared to Stock

Stock is still something that many people invest, a type of investment that sees changes every minute of every day. Gold is exactly the same in that it never stays the same but what makes an investment of gold unique to stock is that even when the market struggles, it never really loses value. Because of being such a solid investment option, you can never go wrong in putting money into gold. As a matter of fact, your wealth portfolio should consist of 3% to 5% gold for the most value and stability.

Reasons for Gold Prices

One of the reasons that gold has reached such incredible heights has to do with supply and demand. With the economy being so unstable and experiencing such ups and downs, people turn to the investment of gold. The same is true because of political change and unrest. After a new President is sworn into office, there will be periods of uncertainty and it is in these times that demand for gold increases, which in turn increases supply.

The level of interest in gold as an investment has become so great that along with people looking for the best gold spot price for coins and bullion, individuals are actually gathering personal gold jewelry, old coins, and even antique gold eating and serving utensils, having it melted down, and actual gold coins or bars made. In this case, most people keep gold in a home safe or bank deposit box to be used during a personal financial crisis although some keep the gold to pass on to future generations as a type of heirloom.

Of course, in the case of items being melted down and created into bars, some people choose to sell it at which time other gold investments are made or money put in the bank for immediate use. However, considering that the dollar is continually losing value to the point that most believe it will soon be worthless, it makes far more sense to buy gold as a long-term investment.

Buying Gold Low and Selling High

Because the price of gold is so high, finding low gold spot prices can be challenging but the goal with investing would be to pay as low a price possible and when ready, sell the gold at the highest price. When gold reached $990 an ounce in the early part of the 1980s, people were shocked but also pleasantly pleased. With the price of gold where it is today, most people seem stunned but it is important to understand the time to invest in gold is right now because according to predictions being made by experts, the price of gold will reach somewhere around $5,000 an ounce by 2015!

Although we have seen some economic stability in the past year, the truth is that there are still many challenges to overcome. Some of these obstacles make people very nervous about the almighty dollar and whether it will ever recover remains to be seen. Instead of taking a chance of throwing away hard-earned money, the more obvious decision would be to learn how to buy gold for investment purposes so there would be something solid to fall back on over a long period of time.

Because the investment of gold is such a sure deal, investors of all levels are getting involved in buying. For instance, to balance out risk associated with uncertainties of the economy, a number of investors from around the world rated among the best have turned to gold. Considering these investors know all the ins and outs of investment opportunities to include gold, it makes perfect sense for someone just learning to invest to follow suit. There is no reason successful investors should reap all the rewards so taking time to learn how to buy gold for investment purposes a critical choice.

Steps for Successful Investing

While the actual steps involved for investing in gold could change somewhat, the following are the basics regarding how to buy gold for investment purposes. Of course, if a new investor needs guidance or support at any point, there are experts to include financial advisors or investment planners available to answer questions.

• For starters, a decision would need to be made pertaining to investment options. If an individual were interested in gold, then the decision to purchase gold would need to be settled in the individual’s mind. Once that has been done it would be much easier to move forward in actually buying. Interestingly, many newbies to gold investing get stuck on this first step, even though they know that gold offers long-term stability and profit.

• Next, the type of gold to invest in would need to be determined. This could be physical gold such as bullion, coins, and jewelry, as well as stocks and ETFs. While it might be tempting to choose stocks or ETFs, one of the most important lessons when learning how to buy gold for investment purposes as a new investor is to avoid risks. As a new investor, it is important to gain confidence, something that comes from physical gold opposed to gold with value represented on paper as in the case of stocks and ETFs.

• When learning how to buy gold for investment purposes, it sometimes helps to play out scenarios. For example, investors need to think about the type of gold that would be hedged if the world’s economy were to crash. Investors should also think about the type of gold investment that they could get their hands on as a means of living or operating a business. Obviously, in both cases, the answer would be physical gold to include coins, bullion, and jewelry, not stocks and ETFs.

• We also wanted to point out that one of the best decisions a person could make when learning how to buy gold for investment purposes is with the purchase of coins. Often, investors interested in physical gold choose bullion but there are actually several benefits in choosing coins instead. For one thing, gold coins are a more affordable type of investment because they are sold in smaller weights. For instance, coins can be purchased at 1/20 of what investors would pay for gold bullion.

• It would also be necessary to locate a gold selling outlet, one with a sound reputation. Many investors today buy online, which is fine and a great way of getting gold for the lowest price but unless the seller works from a position of integrity, an investor could end up with coins that are not 100% gold. For this reason, it would be essential to research different sellers when buying online to determine reputation and standing in the industry of gold investments.

• The last tip in learning how to buy gold for investment purposes covers buying slowly and securing the investment. When first getting started, there is no reason to rush out and spend a significant amount of money. Instead, budget what can be afforded, slowing building the wealth portfolio. Once gold has been received, a decision would need to be made whether to keep it in a home safe, in a bank’s safe deposit box, or perhaps in a vault associated with a gold dealer or broker.

Reasons for Choosing Gold Stocks

Before we get into answers specific to “How to invest in gold stocks”, it is necessary to understand reasons that a gold investment of this type makes sense. For starters, the value of the United States dollar has experienced decline over the past several years in direct connection to economic vulnerability as a result of terrorist threats, natural disasters, ongoing war, and even poor government decisions in America but also around the world.

Many people have turned to investing in gold as a way of gaining some degree of control in a conflicting world. Rather than sit back and just “hope for the best”, small time and major investors see gold as a saving grace. Because the value of gold never experiences dramatic fluctuations, it has been the ultimate form of protection throughout history. Just as with bullion and coins, gold stocks are considered a stable form of investment.

Gold stocks are also readily available and they come in a variety of options, giving investors a unique opportunity to choose what coordinates with personal preference and long-term goal. Moving on to answers to the question, “How to invest in gold stocks” the information provided below should prove helpful to novice and seasoned investors alike.

Stock Options

The first answer to the question, “How to invest in gold stocks” is to determine which gold stocks are available. This information can be obtained from internet research, through a financial advisor/planner or investment professional, or even from family and friends who invest in gold stocks. We recommend in-depth research on a list of 10 or more stocks, providing investors with insight into the company and its operations.

With the list of potential gold stocks, it would be helpful to categorize them. The goal would be to put the greatest amount of money into gold stocks deemed stable and offered through companies with solid reputations, followed by investing a lesser amount of money into stocks considered “out of favor” or those with potential for producing a much lower return on investment. In addition, a small amount of money should be invested in relatively unknown stocks that have much more serious risk.

Next on the list of answers to the question, “How to invest in gold stocks” is determine cost associated with each offering company. Although research would require some time and effort, it would be highly beneficial. The most critical piece of information to uncover would be cost of the mining process for each company. Companies that spend little money seldom utilize state-of-the-art equipment and technology. This means mining costs would be low, thereby creating potential risk to investors.

Leverage is also a key dynamic when finding the best possible gold stocks. Although the amount of money spent on mining is important, it is not the only consideration. For example, companies with relatively high mining costs might be able to leverage resources to reach areas of a mine determined challenging. As a result, more and higher quality gold would be mined, which for investors creates the opportunity to make a greater profit.

The next answer to the question, “How to invest in gold stocks” has to do with reserves. When looking at possibilities for stocks, gold reserves would also be important. Just because a company has significant profits does not mean it has adequate reserves. On the other hand, a company’s profits might be somewhat lackluster while gold reserve potential is great.  Investors need to remember that gold reserves are critical to return on investment.

Obviously, the reputation and stability of the company selling gold stocks would be vital but also the geographic area in which the company operates. A perfect example would be a company that maintains large reserves but one located in a part of the world at risk due to volatile conditions such as corruption, war, and political, as well as economic unrest. In this situation, geographic location could have a direct and negative impact on profit potential associated with the gold stock investment.

Two other answers in regard to the question, “How to invest in gold stocks” is to look at all possibilities and make sure risk is diversified. This means to consider everything mentioned so only the best possible gold stocks would be considered. Then for diversification, investors need to remember the bulk of money invested would go into low or risk free stocks, a small portion of money into speculative stocks, and a minimum amount into high risk stocks.

Gold Investment Tips

When the right gold stocks are chosen and managed properly, they make a great investment. To close out this discussion, we wanted to offer a few tips for building a strong and profitable portfolio.

• Typically, experts recommend an investor portfolio consist of 3% to 5% gold, which could be comprised of gold stocks, ETFs, options and futures, and physical gold to include bullion, coins, or even jewelry

• Whenever serious profits are made from gold stock, it would be wise to sell a small portion from the top, allowing the remainder to continue working

• Avoid companies that hedge because this means that future profits are being sold, putting those companies at risk for major debt. The bottom line is that when a company hedges, its profits are being robbed, something that would affect the investor’s potential profit. While there are some investors that work with companies that hedge, this practice should be done with extreme care.

• While most experts recommend a wealth portfolio of 3% to 5% gold, some suggest as much as 20% for serious investors. However, no matter the percentage of gold in the portfolio, no more than 20% of that should be in speculative gold stocks.

Unfortunately, many people jump in without first learning the details of what it takes to make money with gold. As a result, mistakes are made and sometimes, money lost. We wanted to provide helpful information that would make a difference in gold investments. The process of how to invest in gold does not need to be overly complicated but decisions need to be made from a standpoint of knowledge so this type of investment turns out to be nothing but positive.

One of the first and most important things to remember is dollar cost averaging. That means being able to put a certain amount of money towards the purchase of gold on a regular basis, even when prices fluctuate somewhat. The reason this works is that risk is spread out over a period of time so ultimately, negative aspects are lessened. Overall, a gold portfolio should be comprised of 5% to 15% gold according to most experts although some say 20% would be better if possible.

Gold offers so many things that other investments simply cannot. For example, gold an automatically provides insurance during times of inflation. However, not only is gold recognized and prized around the world but it also faces times of uncertainly. The information below touches on the three ways in which gold works as an investment.

Invest in Gold Bullion/Coins

Although most people purchase gold in the form of bullion or coins, another possibility is with jewelry. Although gold bullion is an excellent choice, many people prefer coins simply because they are easy to sell and store. For these, the following are among the more popular options:

• St. Gauden
• American Eagle
• American Buffalo

With gold bullion and coins, people have an option of storing things within a home safe or if preferred, they could keep the gold in a bank’s safe deposit box. Gold bullion and coins are sold through dealers, brokers, and even jewelers so finding them is easy. The key when purchasing gold bullion and coins as an investment is to steer clear of large premiums.

This type of gold investment should be purchased close to the spot price or at most, a 10% premium. Anything greater means the value of the gold would need to rise to bridge the gap. Now, for gold coins, the most are made in the national mint where a markup of 4% applies, putting the sellers margin between 1% and 3% on average. To determine the premium of gold bullion or coins, the spot price would need to be deducted from the price quoted for purchase. Then, that number would be divided by the spot price, followed by multiplying it by 100.

The key with gold bullion and coins would be to determine the reason for buying first. When looking at gold in this manner as a long-term investment, hitting the spot price becomes even more critical.

ETFs

Another possibility would be gold ETFs, otherwise known as “exchange traded funds”. More and more, this option has increased in popularity because the need to store gold at home, in a safe deposit box, or vault would be eliminated. The most traded ETFs include:

• SPDR Gold Shares – Of all ETFs traded, this is the favorite
• iShares Comex Gold Trust – This is the least expensive with fees at just 0.25%
• ETFS Gold Trust – As the newest offering, physical bullion is stored in Switzerland, providing the investor with a variety of gold types

With ETFs, an investor usually owns the equivalent of 1/10 an ounce of gold. Because of this, if overall investor demand were to surpass the number of shares available, the issuer of the gold would need to buy bullion or coins that would then be converted into gold stock. Regarding the sale of ETFs, whenever a buyer does not exist the gold would be redeemed, followed by the company selling at the gold equivalent.

An important note is that with gold ETFs, the range of expense is between 0.25% and 0.50% but the value of the gold would diminish the longer it is held in shares. For that reason, the fund has to sell gold on occasion to pay for the expenses, which in turn lowers the amount of gold that would be allocated per share.

Gold Miners

The third option is somewhat risky but for some people, it works. In this case, gold would be in the form of gold mining stocks, which could be as high as a 3 to 1 leverage to the spot price. Because mining stocks trade with a much broader equity market, they do have definite risk. Most experts suggest when choosing stocks, the key to a successful investment comes from choosing companies that have excellent reserve growth, as well as strong and proven production.

However, no matter the companies and reputation, it would be imperative all inventory had support by smaller cap companies or with consistent production. In addition, companies should have a solid management team and system in place. Otherwise, there would be risk of the gold mining stocks not being handled properly but also outrageously high fees.

The biggest mistake seen with gold mining is having no cash flow while going through the phase of exploration. Trying to choose the right stocks can be extremely tricky in that only a small number of companies have actually seen worthwhile profits. Therefore, investing in gold using mining stocks is often left to the more experienced investor.