How to invest in gold bullion

Determining how to invest in gold bullion requires careful consideration of the different options that are available. It is also a question of trading and investing objectives. Do you want to invest for a longer duration of time or is your purchase just for the short term? You also need to consider whether you want to have physical possession of the gold, keep it stored in a commercial and secure location or whether you merely want exposure to potential appreciation in the price of gold.

If gaining exposure to the price appreciation of gold bullion is your sole objective then shares, exchange traded funds and futures might be your best alternative. Each of these options provides the ability to buy and sell in short notice on various exchanges around the world. The markets for these products are highly liquid and provide the ability to execute at very short notice.

Futures are the most leveraged product. If you intend to use them then you will need to post margin and know how to manage your risk. The advantage of futures is the leverage and the ability to capitalize on short term movements in price. They are highly liquid but require a high degree of expertise to participate.

Individual stocks and shares are another option for investors and traders. Some established gold producers have existing production facilities and are commercially viable whilst other smaller companies are prospectors and may not have commercial deposits. Whilst each security is responsive to price movements in gold itself, the junior gold explorers are considered more speculative since they may not have established cash flows and need to continue to fund exploration activity. Investing in gold penny stocks or junior explorers is considered highly speculative and it is advisable to do your research before proceeding.

Exchange traded funds are either a basket of gold stocks or an exchange traded product over a store of gold bullion. In the case of the gold stocks ETF, the advantage is that you have diversified exposure to a group of stocks as opposed to just one particular stock. Both of these products can be bought and sold quickly and the US, Canadian and Australian exchanges all have Gold ETF's that may suit your investment intentions. The gold Powershares ETF in the US is a good example.

For the investor that wants to actually hold physical gold you can either purchase gold bullion or gold bullion coins. The coins are easy to transport, can be stored safely in a home safe and can be sold relatively quickly. They also have the advantage of being considered legal tender in some instances. Gold sovereigns are a universally recognized coin for investing. For larger quantities of gold bullion you really need to consider commercial storage facilities. There are several companies that specialize in this and each has different advantages depending on your objectives and geographical location.

Learn how to buy gold bullion online safely and securely.