Daily News

November 24, 2009 – Many types of gold investments trade on today’s major exchanges, but you do not need to become frustrated with the wide availability of various gold products. You can wipe many types of gold investments off the slate immediately just by knowing your reasons for owning gold.

Here are the four most often utilized types of gold investments, with the pros and cons of each.

Type                             Debt-free                 Investor-Held               Immediately Liquid                     Completely Private

Gold Leverage                     NO                               YES                      YES                                                            NO

Gold Mining                          YES                              NO                        NO                                                             NO

Gold Stocks                          YES                              NO                        NO                                                            NO

Gold Bullion                          YES                              YES                       YES                                                          NO

Certified Gold                       YES                              YES                       YES                                                          YES

Gold leverage means that the investor borrows against their current gold holdings, so if the gold spot price drops due to profit-taking you could end up in a bigger hole than you anticipated. Gold mining stocks are somewhat speculative and they may not track the gold spot price. Some investors have made profits with gold mining companies, but other companies have shattered investors dreams by going bankrupt or having their mines run dry.

Gold stocks are affordable and they generally track the gold spot price, but there are often excessive fees to liquidate your holdings, and it could require weeks to convert back to cash. Also, gold stocks may not be allocated or backed by physical gold, so gold share holders could be in trouble in a national financial emergency, or if another gold bullion confiscation occurs.

Gold bullion is a very popular investment because it closely tracks gold’s per-ounce asking price, and many short-term (1-14 month) investors have been able to take profits from the gold bullion market in recent years. However, gold bullion could be confiscated by the US government in a national financial emergency, and the market for gold bullion could be frozen, as was the case from 1933-1971.

Certified gold coins are the most expensive kind of gold investment up front, but they have vastly outperformed the other types of gold investments in the last eight years. Gold coins like the $20 Saint Gaudens were not confiscated historically, and investors utilize these coins as long-term wealth preservation vehicles.

To learn more about the type of gold investment that would work best for you, give us a call or email us for your free copy of our 2010 Insider’s Guide To Gold Investing. 

Daily Updates Archive

Stewart Lawson

Senior Staff Writer - Gold-Investment.info