Investing in gold is tempting but it is also complicated and certainly involves more than just doing an online research of Kerala or Tamil Nadu gold rate today. So let’s take a look at some of the best strategies you can implement to maximize your profits from the gold you invest in:
- Invest in gold futures
The biggest advantage and also biggest risk is that futures are leveraged. That means that you put up only a fraction of the value of your contract in cash and borrow the rest. So when gold goes up, you make money very quickly. But when it goes down, your losses are also very large.
You can also buy options to buy or sell gold on a future date at a set price. Options are less risky than futures; you can lose at most the amount you paid for the option, whereas with futures you can lose more than your initial investment.
Options are appropriate for investors who want to make speculative bets on the direction of gold prices in the short term but don’t want to put up as much money as they would need for a full-size futures contract.
- Investing in gold mining stocks
Just as the movement of crude oil price impacts companies like Exxon or Chevron, the price of gold has an impact on those who mine it.
Gold miners are highly sensitive to changes in the price of gold. If you look at a chart of historical gold prices and compare it to a chart of historical gold miner stock prices, you’ll see a very close correlation.
Given that miners are highly correlated with the price of gold and other commodities, investing in one of these companies is essentially like buying into the commodity itself.
With that said, many factors can influence a particular company’s stock price independent of where gold is trading. For example, a company may be able to cut costs and become more profitable at current gold prices. Or, it may make a major discovery that sends shares soaring.
While investing in individual companies can be risky, investing in mutual funds or ETFs that track an index can help reduce your risk while still allowing you to take advantage of potential gains when they occur.
- GOLD ETF
A gold ETF is an investment vehicle that holds physical gold in a safe and liquid form.
The beauty of gold ETFs is that you can invest in physical gold without the hassle of storing it. You don’t have to find a safety deposit box or rent storage space, and there’s no need to worry about losing your gold if you move or sell your home or apartment. However, the overall process is pretty much the same as physical gold where you track CG gold price and then make the investment at the right time. Click here to learn more.
Gold ETFs are also much more liquid than any other investment vehicle. This means that it’s easy to exchange units in Gold ETFs on any stock exchange around the world that trades these units. This makes them a great way for you to buy and sell physical gold without paying the hefty premium that most investors pay for storage.
If you’re looking for an investment vehicle that will always hold real physical gold, make sure you consider investing in Gold ETFs