Gold Investment Companies: 101 Guide for Novice Gold Investor
Gold investment companies are one of the many ways that you can profit from the precious metals market. This investment is different than buying physical bullion, such as bars or coins, because you are are not taking physical possession of the metal but rather buying shares of companies who invest in physical metal and precious metals securities. Depending on which investment company type you choose, you can profit from different aspects of precious metals market. Generally there are two types of precious metals investment companies, namely, gold mutual funds and gold ETF’s (exchange traded funds).
Gold mutual funds are versatile funds that use investors’ money to invest in a wide array of gold mining investments like stocks of precious metals mining companies but may also include physical bars, securities, futures and bonds. Some investment experts firmly believed that mutual funds are much more leveraged and diversified options compared to exchange traded funds that make their goal to invest into allocated gold bars and closely follow the spot price of precious metals. With neither options will investors acquire any physical gold but rather buy into shares of these companies.
Each of the gold investment companies will have a portfolio of different holdings, and each company will charge different fees and costs to the investor. There are two main types of gold companies to invest in, and these are classified as either open end or close end. This designation specifies whether the company offers shares continuously for new investors or whether shares are only available to investors during the initial public offering. Open end gold investment companies are also commonly called gold investment funds, and are considered mutual funds.
The following is our main gold investment advice. It is important to research and evaluate each of the gold investment companies under consideration. There are many scams that you should watch for, and only use gold options and companies that are verified, and have a good business reputation. This will minimize the risk of falling prey to any scams or frauds.
Gold stock investments are often included in the portfolio of investment companies which specialize in precious metals. Because the gold investment companies are simply the managers and investment advisers for the pooled funds of the investors, each investor will share in any gains seen in their share of the portfolio. For some investors using a gold investment company makes great financial sense, while other investors should steer clear of these choices.