Gold is the most reliable long-term asset. The best investment in gold is to buy it in physical form. But you can also invest in gold through financial investments.
You can invest in gold by buying it in the form of bars of different weights. You can do this with a bank or a reliable specialist. Among the advantages is the simplicity of this type of investment. The investor only needs a passport and the funds necessary for the transaction. Pride in physically owning gold works in favor of this investment. You can take your gold bars home and keep them. You can find out more!
But there are difficulties. Gold is a relatively soft metal. It can scratch. However, each of its scratches will reduce the value of your property. Keeping large bars totaling several hundred grams at home is possible but not safe. A good solution is to rent a deposit box or safe from a bank to store your gold. This will cost you on average 12 euros per month or 125 euros per year for a volume of 30 cubic decimetres.
The significant difference between the cost of buying and the selling price of gold is another difficulty. For example, if the bank sold you 10 grams of gold for 600 euros, it is already ready to buy it from you with a discount of about 5 to 8% (for example at 565 euros). Therefore, in order for such an investment to bring you profit, you need to wait until the purchase price increases significantly. But it can take more than a year.
But remember that gold is the most reliable long-term asset. If you had invested 1,000 euros in gold in 2001, for example, in 2021 you would have around 5,600 euros. The return on this asset over the past 20 years is over 550%! Holding it in bars or coins is the best investment in gold.
Investing in gold in the form of coins is similar to buying bullion. Coins are also sold in banks or in specialized companies. You can also buy them directly from other investors and collectors, who are numismatists.
By investing in coins, you not only buy gold, but also historical and collectible value, thanks to which you can make an additional profit after a long period of time. Indeed, if you were able to get your hands on a rare piece that was released in limited numbers, its value will only increase thereafter. This would then be your best investment in gold!
But there are also disadvantages. They are related to the gap between the purchase price and the sale price (about 7 to 10%), and the strict storage conditions. Gold coins are sold in special pouches or boxes, the opening of which can seriously reduce the value of the asset.
Investing in precious metal mutual funds is a very simple investment in gold. Most mutual funds prefer not to buy physical gold. The most popular instrument of these mutual funds is the SPDR Gold Trust fund. This fund is traded on an exchange. SPDR Gold Trust acquires gold bullion as part of its assets and maintains its own storage facilities for this purpose.
You can buy gold on an exchange using financial derivatives like futures contracts. A futures contract is traded on an exchange and standardized on certain parameters. For example, when you buy a deliverable gold futures contract, you agree to buy the agreed amount of the asset (100 ounces, for example) on a specific date set in the contract (3 months, 6 months, etc.) at a price known in advance (1800 euros for 1 ounce). There are also non-deliverable forward contracts.