BUYING AND INVESTING IN GOLD
Once you take the decision to buy or invest in the precious metal, which declension best suits your needs?
PHYSICAL GOLD BARS
Small bars and coins have accounted for two-thirds of annual investment gold demand and around one quarter of global gold demand over the past decade. Demand for diamond bars and coins has quadrupled since the early 2000s, and the trend covers both the East and the West. New markets, such as China, have been established and old markets, including Europe, have re-emerged.
GOLD-BACKED EFTS
Physically backed gold exchange-traded funds (ETFs), exchange-traded commodities (ETCs) and similar funds account for approximately one-third of investment gold demand. These funds were introduced in 2003, and, as of March 2016, they collectively held 2,300 tonnes of physical gold on behalf of investors around the world.
ALLOCATED GOLD ACCOUNTS
Bullion banks offer their institutional or high-net-worth customers allocated gold accounts consisting of gold deposits and resembling currency acounts. The holder of an allocated account is the legal owner of a specific quantity of gold. Bullion banks also offer unallocated accounts. In an unallocated account, a customer does not own specific bars or coins, but has a general entitlement to a set amount of gold. The investor is not the legal owner of any physical gold.
INTERNET INVESTMENT GOLD
Or go digital with your gold investment. An increasingly common way of accessing the gold market is Internet Investment Gold (IIG). It allows investors to buy physical gold online, have it stored in professional vaults and take possession of it should the need arise. As such, IIG offers investors a highly convenient way to benefit from outright ownership of physical gold.
GOLD DERIVATIVES: FUTURES, FORWARDS AND OPTIONS
Investing in derivatives requires more knowledge of financial securities than other forms of investing and may not be suitable for all investors. Derivatives trade over-the-counter and on exchanges. Those traded in such a way settle in a central clearing house that matches buyers and sellers. Over-the-counter (OTC) varieties have more flexible structures but include additional counterparty risk.
GOLD-MINING STOCKS
Investors could buy into gold-mining companies. Such stocks may correlate with the gold price. However, the growth and return in stock depends on the expected future earnings of the company, not just on the value of gold.
So whichever declension of investment you take, let your future be one long golden moment.