How Does Gold Investment Actually Work? - Finance and Markets

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Gold has become one of the trendiest investable assets of 2020. While the precious metal is always popular to some degree, the gold investment’s typically regarded as more of a passive investment. 

Gold is a reliable store of wealth that will make slow and steady gains over extended periods of time. In 2020, though, gold became more of an immediate opportunity.

This was due to the coronavirus pandemic and the economic turmoil it helped to unleash. Rising demand for gold as a haven caused prices to rise. In fact, over the summer, gold hit an all-time high and has continued to trade at a very high level.

When seeking pandemic-related financial or investing advice, one can hardly avoid mentions of gold. But what often doesn’t come up is how gold investment actually works. 

So for anyone who’s keeping track of gold’s performance in 2020 but unsure what to do, we’ll show you how to invest in gold.

Online Bullion Purchase

The simplest and most direct way to invest in gold is to buy it online in bullion (or buying gold coins). This does not mean that an online gold dealer will send you a physical block of gold. 

Instead, it means that you can buy a physical piece of gold through a reputable online service. It is then stored in a vault until you decide to sell it. 

This works like a stock trade, except you’re buying and selling precious metal.

Mining Stock

In this case, you are quite literally conducting a stock trade. 

The gold market’s top mining stocks don’t exactly follow the price of gold by any means. But their value can rise or fall according to gold demand because they’re correlated with the gold trade more generally. 

You can check out top mining companies at major stock exchanges, making this a wonderfully accessible option.

Gold ETFs

Trading in gold ETFs is another way to profit from movements in the gold price in the same way as stock trading. 

ETFs include bundles of different assets, like miniature portfolios in themselves. A gold ETF is somewhat less diversified but still includes various specific assets like mining shares and futures. Then, buying/selling gold ETFs is somewhat like trading your own small portfolio of gold-related assets.

Gold Futures

Gold futures are agreements to buy metal at a future date. 

If you believe gold’s price will rise, but you agree to buy it in the future for its current price, you end up acquiring gold for less than it’s actually worth. This, in and of itself, makes for a sound investment and gives you the option of then selling the gold at its new price for an immediate profit.

These options comprise the main ways to get in on the gold investment trend. It is up to you to decide based on thorough research and careful consideration. 

Some have seen recent gold crashes as indications that market recoveries were drawing investors out of their “safe havens.” Thus, the move weakened the precious metal’s outlook. 

Others are still focused on the big picture and see gold as an asset that still has the potential to climb as pandemic conditions endure. But whatever you decide, understanding the methods outlined above gives you the option of investing.