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How to Invest in Gold (Video)

How to Invest in Gold (Video)
March 10
20:51 2012

Gold is a global investment tool and is the most popular of the precious metals. It is often used as a way to protect funds against volatility in currency or equity investments due to economic, political or social conditions. There are several investment vehicles available for gold.

The most traditional investment vehicle is the actual purchasing of physical gold. Gold can be purchased in various shapes and sizes, including gold bars or gold coins. These can be purchased through bullion dealers or major banks. Investors who chose to buy physical gold must take extra measures to avoid purchasing counterfeited gold products and to ensure secure storage.

Those who are not interested in owning physical gold can choose to speculate on the open market. This investment option offers flexibility as bets can be made on the price of gold going up or down. It also requires less capital to trade than the physical market as products can be bought or sold on margin. However this is option is also coupled with a substantial amount of financial risk as the use of leverage leads to a higher rate of loss or return on investment.

Now, watch the video for a detailed explanation.

Gold can be traded in the financial markets like many other investment instruments in the form of exchange traded products or derivatives. Exchange-traded gold products include exchange-traded funds such as the SPDR Gold Trust (Symbol: GLD) which can be traded on the New York Stock Exchange. Derivatives of gold products include forwards, futures and options. These can be traded on exchanges such as the New York Commodities Exchange (COMEX) or in private over-the-counter transactions.

A third investment option for gold is investing in gold mining companies by purchasing their stocks or investing in a gold fund. This option is often considered more risky than investing in the physical gold product itself because the price can rise or fall more than the actual metal itself. Also, the price is affected by many factors including the price of gold, the management of these companies, and the overall volatility of the stock market and the underlying currency.

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