Investing in physical gold has its own set of merits and demerits. Storage and insurance related costs can fritter away whatever gains that one happens to make.
Few ways of investing in non-physical gold:
1. Invest in Exchange Traded Funds (ETF).
2. Purchase stocks of companies with gold as their business base.
3. Invest in Gold Derivatives.
Gold ETFs, Company Stocks and Derivatives provide a better way. Here are few tips.
Investment in non-physical gold is possible in few ways:
1. Gold ETFs: Exchange Traded Funds or ETFs provide a safe yet profitable way of gold investment. Trading in these funds is akin to trading in actual stocks. These are traded on stock exchange and the underlying asset behind an ETF is physical gold, which is stored in bank vaults.
The best part of gold ETF investment is that the investor needs not to be concerned about storing physical gold. Secondly, the ETFs are retained in the demat account of the investor. These can be sold or bought instantaneously, thereby resulting in high liquidity, just like normal stocks.
The fee involved in their sale and purchase can be a drawback for some, though one may not mind paying a fee for availing their innate benefits.
2. Gold Company Stocks: An indirect way of investing in gold is purchasing stocks of companies that have gold as their primary business concern. Your fortunes increase with those of the company the stock of which you hold.
But rise and fall of the stock may not necessarily reflect performance of gold. Certain issues that have impact on its performance may not affect price of gold itself.
3. Gold derivatives: You may also consider futures and options if you want to invest in non-physical gold and have a fat pocket. Get started with trading in gold derivatives by getting in touch with a commodity broker as the trading is conducted on a commodity exchange. The returns are high, but so are brokerage charges.
There are two major issues involved with gold derivative trade. One, you would need great deal of money for getting started. Second, there are liquidity issues and desired contracts may not be available at a given time.
Non physical gold works perfectly for investors who want to avoid hassles of handling physical gold. The returns are huge, liquidity is high and investment is easy.