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The price of gold has achieved several record highs this year. Its upward trajectory began in March when it hit an all-time high of $2,160 per ounce. Since then, it has hit several new record highs — with the latest record-breaking price occurring on August 13, when gold rose to over $2,506 per ounce.
Gold’s value has soared to new heights this year for several reasons, including a long period of high inflation coupled with geopolitical and economic uncertainty. With those factors looming, investors turned to gold to help hedge against losses to their portfolios and protect against the possibility of market declines.
With gold’s price hovering well above what it was this time last year, you may wonder what gold type is best to invest in now. After all, there are so many ways to gain exposure to this precious metal, including 1-ounce gold bars, gold stocks, and gold coins. Here’s what experts think.
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With gold’s price high, which type is best to invest in? Experts weigh in
These are some gold options you may want to consider with the price of gold so high, experts say.
Gold bars and coins
Gold bars and coins can make a lot of sense to invest in when prices are high, experts say. After all, these physical gold investments offer numerous unique benefits like liquidity to investors, especially in today’s economic climate — and there tends to be more demand for physical gold bullion when the price is up.
Christine Luken, financial coach, and founder of Financial Dignity Coach, says her preference is investing in gold coins, especially ones considered legal tender. For starters, gold coins are smaller and less expensive than gold bars and easier to exchange for cash. Plus, some gold coins are also worth more than the spot price of gold due to their rarity. Investing in gold coins with historical or collectible value could provide additional benefits beyond just the value of the gold itself.
Andy Schectman, owner and president of Miles Franklin Precious Metals, recommends 1-ounce gold coins, such as the Gold Eagle and Gold Buffalo, which are issued by the United States Mint.
“These coins are in strong demand and benefit from legislation in nine states, with more expected to follow, recognizing gold and silver coins from sovereign mints like the US Mint as legal tender,” says Schectman. Investing in gold coins from reputable mints adds a level of authenticity and assurance to the investment.
Find out more about the gold investing options available to you here.
Gold ETFs and gold mining stocks
Buying shares of a gold exchange-traded fund (ETF) might also be a good option, experts say.
“When purchasing gold, investing in low-cost gold ETFs may be a smart choice since choosing which gold company and how much is enough new production can be difficult from the outside looking in,” says Steven Conners, founder and president of Conners Wealth Management. Gold ETFs offer an easy and convenient way for investors to gain exposure to the gold market without owning physical gold.
Investing in a gold ETF is often less risky than investing in a single company, as buying one gives you a nice cross-section of companies in this area. When it comes to gold ETFs, Conners’ preference is the gold ETF GLD, NYSE, which provides diversification with a modest fee. Diversifying within the gold sector can help mitigate risks associated with investing in individual gold companies.
For long-term investors who are concerned about portfolio diversification, gold mining stocks or mutual funds that focus on gold companies may be suitable, says Kevin DeMeritt, founder and owner of Lear Capital, a precious metals firm. These investments not only offer exposure to gold prices but also the potential for profits from mining operations, although they come with higher risk due to the performance of individual companies. Understanding the dynamics of the gold mining sector is essential before investing in gold mining stocks.
What gold assets should you avoid now?
There are also some gold options experts say to avoid right now, experts say, including:
Gold jewelry
You may want to avoid investing in gold jewelry now, according to Conners. Investing in gold jewelry may not be the most profitable option for investors as the value of jewelry is also influenced by factors beyond just the value of the gold itself. Consider focusing on investments that offer more straightforward and transparent value propositions.
Modern collectibles and proof coins
It also makes sense to avoid investing in modern collectibles and proof coins, according to Schectman. These products are often marketed with significant markups and elaborate stories, making them less favorable for investment purposes. Opting for traditional gold bullion coins and bars can provide a more stable and reliable investment choice in the long run.
Gold futures and options
Due to the substantial risk of losing money with gold futures and options, you should avoid these complex financial instruments, especially if you’re a beginner investor. It’s essential to understand the intricacies of futures and options trading before venturing into these markets to avoid significant financial losses.
The bottom line
Ultimately, the best gold type to invest in with prices near all-time highs depends on your financial goals, risk tolerance, and how long you plan to hold the investment. Physical gold, like gold bars or gold coins, is typically better for long-term investing, providing stability and inherent value. Gold ETFs or gold stocks, on the other hand, might be more suitable for those looking to capitalize on shorter-term price movements and market fluctuations. Consulting with a financial advisor can help you determine the most appropriate gold investment strategy based on your individual circumstances and objectives.
