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Stay informed about everything you need to know about investing
You are thinking about investing in gold. But what options are there? What are the advantages and disadvantages of each option and which one is best for you?
Investing in physical gold means that your investment is truly tangible, with no counterparty risk. Physical gold is known as good protection against inflation or economic crises because gold maintains its intrinsic value and is easily tradable worldwide.
With GoldRepublic, your physical gold is stored in independent vaults, so you don't have to deal with the risk of faulting it at home either. You also benefit from the buy-back guarantee on all our precious metals, so you can sell your gold back to us at the current gold price at any time.
Because you own tangible gold, your gold cannot simply disappear due to bankruptcies or digital hacks, unlike other gold investment options. By investing in physical gold, you are expanding your investment portfolio with a valuable investment product with peace of mind as an important advantage.
A gold ETF (Exchange Traded Fund) is a investment fund that the market price of gold follows without having to hold physical gold. They are freely tradable on the stock exchange, the additional costs are usually low and you can often start investing from a small amount.
The disadvantage is that you have no direct physical possession of the gold, and there are management costs associated with the fund, which can reduce returns.
Through a broker, you can invest in a gold mining stock. It is an indirect way of investing in gold, because you are not actually investing in gold, but you are investing in a mine where gold is mined.
Gold mining stocks benefit from rising gold prices because the operational costs of mines are relatively fixed. This means that an additional increase in the price of gold immediately improves the result, leading to a greater increase in the share price than the gold itself. This can make gold mining stocks attractive to investors who seek higher returns and are willing to accept the generally higher volatility.
Gold futures and options are derivative products that allow investors to speculating on the future gold price.
A gold future is a binding contract to buy or sell a fixed amount of gold at an agreed price at a future date. On the contrary, options give the right (without obligation) to buy (call) or sell (put) gold at a strike price, so that the maximum loss is limited to the premium paid.
These instruments are traded on exchanges such as CME Globex. It is usually recommended to only invest in gold futures with sufficient experience, due to extreme volatility and high risks of losses.
Gold is often seen as an interesting addition to an investment portfolio, because the price of gold is usually not related to the price of many stocks and bonds. As a result, gold helps to limit fluctuations in the overall portfolio.
So if you want to expand your investment portfolio with gold, you have various options. You can choose one of these options, but of course you can also combine different options.
The percentage of gold in a portfolio depends on the risk profile and the investment goals by the investor. For cautious investors who prefer not to take too much risk, a range of 5% to 10% may be appropriate. They may also be more likely to opt for gold investments that are known for broad diversification and low risk, such as physical gold or gold ETFs.
The more adventurous investors who are willing to take more risks can go for percentages of 10%-15% or higher. They may also be more likely to opt for more volatile gold investments, such as gold futures or options.
An investor prefers to buy gold at a time when the gold price is low and he sells this gold position again when the price is high. After all, this is how the return is the highest.
If we go back in time, we see that the following times were good for buying gold:
Yet no one can predict exactly what the gold price will do. That's why it's very difficult to time buying and selling moments exactly right.
When investing, the longer the investment gives time, the greater the chance of a higher return. That's why it can be attractive to start as early as possible with buy gold and only do it in the long term selling. This increases the chance that your gold investment will be worth more.
Only invest in gold with money that you can afford to lose for the time being and be aware of the risks associated with investing in gold: you may lose (part of) your investment.
If you invest a large amount of money in gold at once, it may just be that the gold price is high and then falls. Conversely, the gold price can also be low and then rise sharply.
But because no one can predict the market, it can be more interesting to spread your deposit amount over several months. This is also known as dollar cost averaging. This way, you will experience several purchase moments and the price will sometimes be relatively high and sometimes relatively low. In this way, you spread your risk and increase the chances of buying gold at favorable times.
Through GoldRepublic, you can contact us Gold Savings Plan invest in gold periodically. This is possible from as little as €50 or 1 gram of gold at a time and is fully automatic.
Every week, two weeks or month, you buy the amount of gold you want at the current gold rate. The transaction costs are also included in this savings plan 50% lower than when you buy gold once, which means that your return below the line is higher.
In addition to gold, you can also consider investing in silver whether platinum for extra diversification in your investment portfolio.
Silver is more volatile and has a high industrial potential; platinum is scarcer and therefore more popular. You can also buy both precious metals via GoldRepublic: once or with our monthly savings plans.
Gold offers various investment options, from physical gold to ETFs and derivatives, with each option suited to a different purpose and risk profile.
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