There are a few different ways to buy gold online without storing it, including purchasing gold receipts, shares in gold mines, shares in exchange-traded funds (ETFs), and gold futures.
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Gold Receipts
Perhaps the simplest way to buy gold without storing it is through a gold receipt. Electronic tradable receipts (ETRs) of gold can be bought and sold on the stock market.
The receipts are backed by gold in the vaults of bullion banks that they can be exchanged for. They provide investment exposure to gold without needing to store it for yourself.
Before moving on to the other methods of gold storage, here are some general tips when buying gold:
- Physical gold is difficult to move and store yourself. Consider allowing your gold to be stored in a bank for reduced cost and hassle.
- Gold Receipts are the closest thing to owning physical gold yourself while it is stored elsewhere. But it does have disadvantages when compared to keeping physical gold yourself in a real state of emergency.
- Consider investing in gold mining stocks, exchange-traded funds, and gold futures as alternatives to the direct purchase of gold if you are more interested in higher potential gains than in a store of wealth during times of trouble.
Gold Mining Stocks
There is always much more gold stored above ground than there is gold dug up in gold mines in any given year. That being said, gold mining stocks still tend to be highly correlated with the actual price of gold.
They can also be more or less profitable as businesses through their abilities with cost-saving measures, prospecting, and general business practices.
If you’d like to invest in gold in the long term but would also like a steady income from your investment, gold mining stocks can be an excellent option.
Just be careful, as any single gold mining company can go bankrupt for reasons unrelated to the price of gold. Consider diversifying your portfolio of gold mining stocks to mitigate this particular risk.
Exchange-Traded Funds
For a good balance of security and diversity, purchasing shares of a gold exchange-traded fund (ETF) is a great solution.
This is a fund traded on the stock market that backs its shares by gold purchased and kept in banks. When more shares are purchased, more gold is too. When shares are selling off, the gold is sold off.
This is probably the easiest and safest way for the average retail investor to buy gold without any of the hassles associated with its storage.
You are also not exposed to the business practices of mining companies, which can change profitability just like any other business.
The trade-off is that you’ll only make money if the price of gold increases, and you’ll have to pay an annual management fee for storing the gold on top of that.
Gold Futures
If you are really looking to play the markets, purchasing gold futures is the highest risk, highest reward option mentioned on this list.
A gold future is a contract to buy or sell a certain amount of gold in the future at a pre-determined price.
The bet is that if the price of gold goes up in the meantime, you’ll earn money by getting to buy it at a lower price.
If the price of gold goes down, you must still buy it at the previously agreed price and lose money in the process. The reverse is true for those on the other side of the contract.
It’s a tricky concept to get your head around, but it means you can buy or sell with greater risk than normally possible.
If you’re interested in speculating on the gold market, this is one way to make or lose a lot of money fast. Importantly, there are no management fees associated with holding future contracts as well.
Wrapping Up
There are a lot of options when it comes to buying gold online without the need to store it. It all depends on your risk tolerance and desire for steady income vs. using gold as a defensive hedge.
You should do what makes the most sense for your investment strategy and goals.
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