If you’re living in a free market economy such as the United States, pursuing financial security can feel like running in water. Like most people of my generation, the memories of the 2008 Financial Crisis are still at the forefront of my mind, and some are still reeling from its effects. Who would have known that the richest country in the world would be whipped by such economic instability? This is why many people, like myself, are looking at securing my family’s future financial position.
One of the best ways to do this is to invest in gold. Why gold, you ask? That’s because gold is practically recession-proof. Gold prices are not affected by global crises, inflation, and political disturbance. The Balance also notes that gold isn’t in correlation with other assets, and thus it’s price doesn’t rise or fall when the prices of other assets do. This is why many look to gold as a way to hedge their finances against economic instability.
If you want to start trading gold, you have to know the different types of gold for trading. The most popular is gold bullion, which come in the form of gold bars and gold coins. Companies often buy gold bars, while one-ounce coins are the most common among private investors. See also: What is a Gold IRA Investors Risks vs. Benefits
Gold jewelry and numismatic coins with artistic value can also be traded, albeit at a significantly lower price depending on its purity (karat). While the price of gold jewelry can rise faster than bullion in a high performing (bull) market, it also drops significantly faster in a low performing (bear) market.
Another type of gold investment you can pursue are contracts for difference or CFDs. Gold CFDs are theoretical orders to buy or sell a specific amount of gold. The profit or loss is then split between the investors. The most obvious advantage of trading gold CFDs versus trading actual gold is that you don’t have to actually own physical gold. The trading happens by way of speculation, much like stocks. Another advantage is that CFDs only cost you a fraction of the amount of gold. This is particularly useful if you don’t want to invest a lot of money in gold. Finally, there are no time constraints. An article on FXCM about trading gold states that gold CFDs have no expiration so your investment can be held for as long as you see fit. The only drawback is that they’re among the most liquid commodities out there. Because the market is very volatile, high stakes are also mean high risks.
Lastly, you can trade gold exchange-traded funds (ETFs). Gold ETFs are funds that aim to track the price of gold, usually backed by actual gold. Although ETFs are not equivalent to gold and can only be converted to cash, they can be traded in major stock exchanges. ETF trades are usually charged with a commission and an annual storage fee.
Of course, it’s wise to diversify your investments. You can look at trading different types of gold. The key thing to remember is that you have to be prepared to be in it for the long run to be able to reap good profits. A long-term investment can help you plan for the future and gives you more flexibility to balance your financial pursuits and family. To learn more, check out The Roanoke Star’s tips on this matter.
