Bear Market Investing Strategies: 37 Recession-Proof Ideas to Grow Your Wealth - Including Inverse ETFs, Put Options, Gold & Cryptocurrency by Freeman Publications

Author:Freeman Publications
Language: eng
Format: epub
Published: 2020-07-21T17:00:00+00:00

Physical gold

ETFs which track the price of gold

Mining company stocks

Streamers

Physical gold, also called spot gold, allows the investor to touch and feel the gold they've bought. Some investors prefer the security that owning physical gold brings. After all, in case total economic collapse occurs, physical gold can still be used to trade for items. This might be an unlikely event, but it suits the mindset of certain investors.

There are many places you can buy physical gold from. The most obvious place is a jewelry shop, although in the West you’re going to find a preponderance of diamonds in such stores. There are reliable online sources such as APMEX, J.M Bullion and wholesalecoindirect.com.

There are different kinds of spot gold you can purchase. Typically bullion is the most sought-after since this is pure gold, often 99.1% and above. Other forms of gold are usually alloyed with nickel or zinc to benefit certain industrial processes. The purest form of gold an investor can buy are Canadian Maple Leafs. These are 99.9% pure and are usually in the form of coins.

When buying physical gold, look for the name of the manufacturer, the purity and weight to be stamped on its face. Reputable mints include the Royal Canadian Mint, Valcambi and Perth Mint. The United States Mint also produces bars, but its major product happens to be coins.

Coins are a bit different from bars and aren’t always the purest. Some coins, such as the US Mint American Eagle, are 91% gold but have a higher value than pure gold (per ounce) thanks to its desirability as a collector’s item. When buying coins, you’re also purchasing the desirability of the coin and you should thoroughly evaluate its merits and demerits.

We should also note that contrary to popular belief, you can hold physical gold and silver with a self directed IRA or a 401(k) established with a trust company. You cannot buy physical gold with a conventional IRA, because they do not allow for “special circumstances” assets like precious metals. Although you can transfer your current IRA to a self-directed one.

When buying physical gold, it’s better to buy workable sizes instead of one huge size. For example, it’s better to buy 10 one-oz. bars than to buy one 10 oz. bar. This way you can sell portions of your investment into the market should the need ever arise.

A second way of investing in gold is via ETFs. ETFs vary in terms of the strategies they apply and you should carefully evaluate what these are before investing in them. A lot of ETFs invest in gold futures while some invest in mining companies and so on. Still some more invest in physical gold.

There are a few risks of investing in ETFs. For one thing you won’t own the metal directly. In fact, you’ll typically be at least two steps removed from it. You’ll own shares in a fund that invests in futures contracts. As a result, you might be exposed to the type of price action that oil experienced in the early part of 2020.

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