Gold is certainly having an interesting year in 2016. It has seen a meteoric increase in demand, a reduction in supply, and a rise in interest rates. It has also become one of the most sought after commodities this year. A lowering of oil prices and unstable financial certainty has led to it becoming more popular.
The general consensus seems to be buy gold. There is, however, more than one way to buy the precious metal. Two of the most popular methods of investing in gold involve buying stocks in mining companies or purchasing physical gold. Let’s look at the advantages and disadvantages of both of these choices:
What many find most comforting about owning physical gold is a sense of safekeeping. Once you have purchased a certain amount of the precious metal, your investment is safe. You can choose to sell it when prices are high enough. You can also decide to keep it as a form of security for the future. When you have bought specific ounces of the metal, this value cannot be altered in any way. This is a good venture for those who are not too keen on playing the game of investment. The physical embodiment of the yellow metal requires very little interaction or effort and can remain. It will remain unchanged, until you decide to exchange it.
One of the deterring factors to obtaining physical gold, however is in fact its physical nature. Once it has been bought, this gold has to be stored somewhere. There is often a great deal of cost involved in the transporting, storing, and securing of your fortune. After all, when you have obtained your coins or bullion you will have to keep it in a safe and secure place. There are those that would simply not have this kind of responsibility.
Stocks in mining or dealers is often a preferable option for those who are well-versed in investment. This is because, if it is done right, there is a profit to be made. Coins or bullions made of the precious metals do not generate any form of income or profit. The trends, historically, have also shown that stocks typically tend to produce higher yields than either bullions or coins. Thus, if you actually want to make returns on the money that you have invested, then stocks are for you.
This profit, however, does come with a certain amount of risk involved. This is typical of most investments. One of the disadvantages of financing gold stocks is the costs involved with the mining operation. This is because this operation hinges upon several aspects. For instance, cost of equipment, transportation, and production costs are all featured in the investment that you are making. This means that if there is an increase in price of any one of these factors, the profit that you are making may take a hit. The money made also depends on how well the mining company is performing and how much confidence investors have in the corporation.
There are advantages and disadvantages to both options. You have to choose the method that is most closely aligned with your expertise and requirements.