Investing in Gold Stock vs. Bullion
The terms “gold investment” and "gold stock investing" come up every now and then among investors and other people involved in finance. Yet these are terms that many people do not fully understand.
Of course, the actual substance of gold is not something that we can “invest” in the same way that we invest in normal stocks – it is not a company, nor is it a commodity whose value rises and falls significantly on a day-to-day basis.
Still there are multiple ways to invest in gold. Namely, you may choose whether to invest in gold bullion, or gold stocks, and each has its own benefits and strategies.
Gold bullion investments work differently from essentially any other sort of investments in that they are generally intended more for safekeeping of your money, rather than for growth or profit.
There are a number of resources online that allow you to literally purchase any quantity of physical gold bullion you may want to buy. The benefit of this is that it places your monetary value in a substance that has a relatively stable value.
The price of gold does fluctuate over time, so you may make or lose an amount of money depending upon how long you maintain your investment. However, holding onto your money is theoretically more of a risk, because the value of the dollar can be a more volatile one.
Gold Stock and Funds
Investing in actual gold stocks generally refers to the idea of putting your money behind companies that deal with gold mining; this works more like any other investment.
Typically, however, this is also seen as somewhat of a playing-it-safe investment, as gold mining companies tend to have fairly stable numbers and profits over the course of the years. Some would even argue that such companies are more predictable than most stocks, and thus that investing in gold stocks is a relatively safe practice.
Just be aware that the price of gold stocks often develops in a similar direction as the price of gold. And like in all industries, the are relative good and poor performers among the gold stocks. One other related option you have is to invest in mutual funds that invest in gold mining stocks. In that case you leave the stock picking to the fund manager.
Ultimately, the two types of investments differ greatly from one another, so if you are considering “investing in gold,” it is important to know which one you are talking about. However, investing in bullion and investing in gold stock are actually quite similar in that both are generally considered to be defensive investments.
In both types of investment, you are entrusting your money to a stable source that rarely sees large movement over short-term periods. If you are looking for a potentially large gain investment, you will likely prefer to look elsewhere; however, if you are looking to protect existing value, gold investment is well worth considering.
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