Among other precious metals, gold has been the most popular choice among investors. Most people today view the metal as a hedge against inflation and a measure of protection in stringent economic times. Many people choose gold to diversify their portfolios.
There are plenty of ways of investing in gold including investing in the physical form of the metal, buying gold futures, mining stock or simply gold stocks. Investing in gold stocks is one way of making money off investing in gold. In order to get started, it is important to keep the following things in mind.
Tips for Gold Backed Equity Investments
- Choose gold stocks with companies that have a good amount of deposited gold. It is always best to go for those companies that operate gold mines or are already producing gold.
- Don’t think that you have fully diversified your portfolio by investing in gold stocks. In fact, you should diversify your investment in gold. Purchase 4-6 different gold related stocks so that if one goes down, the other is protected
- Since gold stocks don’t often reflect the worth of physical gold, avoid using gold stocks to protect yourself against stringent economic times. A lot of times, gold prices decline as price of gold spot increases. If you are really looking to diversify and protect yourself against the harsh economy, mix physical gold with gold stocks
- Never buy gold stocks all at once. Instead, buy it in stages. Choose a few stocks here and a few stocks there but don’t go for all of it at once as this will allow you to minimize losses incase there is a sudden drop in price and therefore provide a great safety net.
- You should try to invest in a gold exchange traded fun or exchange traded fund. What are ETFs? Simply put, a gold ETF tracks the price of a basket of gold related stocks and therefore render immediate diversification to investors. Another benefit of a gold exchange traded fund is that you will not have to conduct a lot of research on individual gold related stocks since ETF is a combination of all of them.
Investing in gold stocks is one way of investing in the metal. However, it is important to be careful with your gold stocks investment in order to reap the maximum benefits out of it including diversification and minimization of losses. Keep in mind, the historic value of gold has always been of extreme value, which is yet another reason having an IRA featuring gold can be a very smart long term play.
About Tim Schmidt
Tim Schmidt is an Entrepreneur who has covered retirement investing since 2012. He started this website to share his expertise in using his Self-Directed IRA. Most recently he's been advising individuals to diversify into precious metals ahead of a certain recession. He invested with Goldco.