Gold Stocks Versus Physical Gold

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When it comes to investing in gold, there are a number of differences depending on whether it is gold stocks or actual physical gold that you are purchasing. When investing in gold stocks, you are simply purchasing a company stock, just like any other one. However, when investing in physical gold, what you are purchasing is actual real pieces of gold, whether that be coins or bars. 

In general terms, the price of gold stocks are related to the cost price of physical gold. However, gold stocks are at the mercy of various risks, such as the wider stock market. 

Deciding on which type of investment is best comes down to the individual circumstances of the investor, i.e. their risk profile and investment goals. 

Gold Stocks

As far as gold stocks are involved, there are a number of ways that you can invest in them compared with physical gold. The main three options are gold certificates, exchange traded funds, and gold mining stocks.

  • Gold certificates – this type of investment is not as popular as it once was due to the fact that the United States Dollar is no longer backed by gold. These pieces of paper prove that you own gold that you do not physically have in your possession. 

 

  • Exchange Traded Funds (ETFs) – these funds are traded on the stock exchange, much like any other ETF is. The difference is that a gold ETF is invested specifically in various gold mining companies. Because of this, it provides a certain level of diversification.

 

  • Gold mining stocks – these represent shares of a particular company or companies within the gold mining industry. These investments are highly liquid in that they can be purchased directly from a stock exchange. 

Physical Gold

Investing in physical gold can be done in one of two different ways – either by purchasing gold coins or by purchasing gold bars.

  • Gold coins – although most people think gold coins only exist in those Hollywood movies withs pirates in, they are actually very real. They are produced in different mints all around the world and can even be used as actual currency should you want to, as they come with a face value. However, the gold that has been used to create the coin is often much more valuable than that of the face value – thus making it almost irrelevant.

 

  • Gold bars – these come in two different types, minted gold bars and cast gold bars. The latter of the two are made by putting liquid molten gold on a strip of metal, which is then cut into bars. Cast gold bars however are made from a mold. The aesthetic and texture of these two types of bars differs greatly from one another.

For anyone that is interested in finding out more information on how to invest in gold and how to build up a strong retirement portfolio that is highly diversified then follow the link to the best gold backed ira companies out there that can help you with this.

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