You can buy gold in different ways. For example, you can go to a jeweller and buy a nice gold necklace or ring here. However, this purchase is primarily intended as decoration and not as investment. The jewels also retain their values and can even increase in value if the gold price rises. However, if you want to buy gold to earn from a rising gold price, there are better ways you can do this.
For example, it is possible to purchase real or virtual gold from a bank. Another way is investing in gold or companies involved in mining the precious metal through a broker. We will talk about this last option in this article. In particular, we will discuss buying gold through CFD investing. We also make a distinction between buying for the short term and buying for the long term.
Why invest in gold?
The price of gold has continued to rise steadily over the last ten years. This is partly due to the fact that the demand for gold has only increased. In addition, it is a natural commodity that may also be depleted. These are the ideal conditions of a high demand and small supply that guarantee the price of a good will increase in the long term.
What makes gold a good investment is that the precious metal always keeps its value well. This is in contrast to, for example, currencies. In times of economic uncertainty people therefore choose to buy gold. As a result of this growth in demand, the price of gold will increase and purchasing it is therefore a smart investment.
Opening a gold account at a bank
One way to buy gold as an investment is to open a gold account at a bank. This can be done in two different ways. For example, there are allocated and unallocated gold accounts. In the first variant, the bank actually has the physical gold that you have bought from them. With the unallocated account, you actually buy virtual gold that you cannot physically request from the bank. However, the account will increase in value if the price of gold goes up.
Buying and storing gold bars
The second option that you have when buying gold is to physically buy and store the precious metal yourself. In most cases people buy gold bars that they store in a safe at home. A disadvantage of this method is that you are responsible for the safety of the gold. Another disadvantage is that when you physically buy gold you do not always get the most favourable price for the gold offered.
Investing in gold as stock
The way to buy gold that is especially interesting, in our opinion, is investing in gold as stock. You do not run the risk of having the gold stolen and you buy and sell for the current price of the precious metal. Another advantage is that you do not have to pay any costs to the bank for setting up a special gold account.
Investing in gold stocks can be done either for the long-term or for the short-term. With long-term investments, you plan to hold the stocks for a long time because you anticipate a rise over a longer period. In the case of short-term investing, you expect that the price of gold will soon show a sharp rise or fall due to a certain development in the world.
Buying gold stocks for the long term
You can buy stocks of various commodities on the stock exchange. For example, it is also possible to invest in stocks of oil or silver. The price of the gold stocks is linked to the current gold price. The people who buy these stocks usually do this to invest their money in gold for the long term. You buy when the price is low and sell when the price of gold is high.
Short-term investing in gold via CFD broker
If you expect people to take refuge in buying gold due to a sudden change in the world, an increase in the price of gold will very quickly follow. At those times it is possible to make a lot of money by investing in gold in the short term via a CFD broker. You can also make use of leverage so that you can buy a lot more gold than you actually have money to invest.