Advantages and Disadvantages of Investing in Gold Bullion vs. Gold Stocks vs. Gold ETFs
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Most analysts agree that a well-balanced portfolio should allot a certain amount, somewhere between 5-15%, to gold, depending on your outlook for the economy in the near, mid, and long-term future. One decision you need to make is how to allocate this portion amongst the several options for owning gold. You can invest in the physical yellow metal, buy gold mining equities, or buy gold ETFs.Investing in Physical Gold Bullion
Amazingly, there are several ways you can invest in physical gold. Most people imagine hoarding the physical coins and bars themselves, maybe burying these in your backyard, but you can invest in bullion through “pooled” accounts (a bit like mutual funds), and you can also invest in physical gold directly without ever needing to store it yourself.Buying physical gold and storing it yourself.
This is the most tangible option and might give the most feeling of security. If the world’s banking system collapses, it’s nice to know you’ve got some gold coins at home (or in a safety deposit box). The downside to keeping it yourself is theft and liquidity. You need to have the gold delivered to your home, you need to store it privately, and it also means that if you ever decide you need that money in a hurry later on, it might take a few days to be able to sell your gold. Also, you might want to spend money to insure it.Investing in pooled accounts.
You can buy gold through a dealer like Kitco or the Perth Mint, own your exact allotted amount, but the gold itself will be fungible. This means that there is no specific gold bar with your name on it. Rather, an audited amount of gold is sitting around in the dealer’s storage facilities and the gold you “own” is really a promise to pay you back that amount of money once you decide to sell it again. You can, of course, opt to take delivery of your gold, at which point you would become a physical buyer.Buy physical gold directly, but don’t take storage.
A variation and “middle way” between the above two options, you can buy gold most directly through a dealer like GoldMoney, which is basically a gold bank. GoldMoney does not use pooled accounts – you will actually have a gold bar there with “your name” on it, so to speak. Their vaults are audited regularly and if you buy a half ounce they will physically add a half ounce to their vaults for you. The advantage here is that they pay for the storage and insurance. There is also a considerable degree of liquidity, since, as a bank of sorts, GoldMoney gold is instantly convertible back into one of four currencies. The downside to this option is that there is a monthly fee for holding your gold, and this small amount gets deducted from your total goldgrams balance. Theoretically, then, if you let your account sit long enough, the balance could go down to zero (this would take an extremely long time, depending on the price of gold).Top Gold and Silver Dealers – Invest Directly In Bars and Coins
http://www.getmoneyenergy.com/2009/09/advantages-disadvantages-investing-gold-bullion-gold-stocks-gold-etfs/
