Overview of Gold Investment Products

In recent times there has been a rise in the number of options available to consumers looking to build an investment portfolio. Gold investment products are increasingly being used as a secure way to protect the value of consumer portfolios. Investors who are nearing retirement age are becoming wary of the more risky investment options and are now investing at least some of their IRA into gold products as it offers not only an additional level of diversity, but also an additional buffer of protection from things like the recent economic financial crisis and inflation. As a result of this increased interest in gold, there are now a range of options available to investors.

Gold Accounts

There is nothing like owning your own piece of gold. However, the risks associated with keeping gold in a safe place can be a worry for many investors. That’s where gold accounts come in. A gold account is way to invest in physical gold but without the hassle of having to take physical possession of it.

In a gold account scenario, the investor is registered as the actual owner of a specifically marked piece of gold, and the gold is then placed in secure vault under the administration of a registered gold depository. This depository does not own any of the gold that is stored in their vaults. They are merely custodians of these gold stores and make their money by charging a fee for the storage facilities and insurance. The advantage of gold accounts is that unlike unallocated gold, this gold is completely secure and cannot be sold, traded or lent out to any other parties without the express permission of the current gold account holder.

Exchange Traded Funds

One of the more common investment vehicles used by gold investors are exchange traded funds or EFTs. These are funds that are backed by physical gold bullion and are actively traded on the stock market. Similar to gold accounts, the purpose of these funds is to allow consumers to invest in the gold market but without having to take possession of physical gold bullion or have the added expense of storing it securely somewhere. Shares in these EFTs have long been a part of many long term investment accounts and are an excellent strategy for IRA accounts, providing the asset protection and diversity necessary for these difficult and uncertain economic conditions.

Gold Futures and Options

Another way to trade in gold on the open market is by investing in gold futures or options. Investing in gold futures involves entering into a contract to purchase an amount of gold at a future date for a specific price. Profits are realised if on the purchase date, the price of gold had increased above the agreed purchase price. The disadvantage with futures however, happens when the gold price does not reach the future purchase price. In this scenario, the investor would have to foot the bill for not only the purchase price of the gold, but also the shortfall to make up the difference to the agreed purchase price.

Trading in gold options reduces this risk somewhat. With gold options, the investor purchases the right to buy or sell gold at a specified future date, however there is no obligation to close on the deal. If the future price does not achieve what the investor was hoping for, then investor can simply walk away from the deal. The only loss to the investor in this case is the original cost of rights to the option.

Gold Mining Stocks

All of the above gold products are in some way linked to the physical price of gold. For those investors that are after something that is no so dependent on the current gold price, holding stock in gold mining companies can be a good option. As the price of these stocks are affected by a variety of other factors such as business efficiency and performance, they are good way to diversify an existing gold portfolio without having to strictly follow the ups and downs of the gold price.

The gold products discussed in this article are the most popular ways to leverage the general stability and liquidity provided by gold. Other lesser known gold products like gold certificates, gold accumulation plans, gold IRA plans and gold linked bonds are also available to consumers, however they can be open to more risk than the classic gold products. To learn more about these other gold investment products and how you can use them to diversify and protect your IRA or investment account, talk to a gold IRA specialist, financial planner or broker. The best way to do that is to have a quick chat on our homepage.  You’re sure to find a reputable Gold IRA provider tailored to your specific needs, who can quickly and easily walk you through the process.