Gold is a hot commodity right now.
The economy is in shambles. Copper is in high demand. That’s thanks to the expansion of electric-vehicles every year.
The ExodusPoint Partners International Fund returned 0.36% for May, bringing its year-to-date return to 3.31% in a year that's been particularly challenging for most hedge funds, pushing many into the red. Macroeconomic factors continued to weigh on the market, resulting in significant intra-month volatility for May, although risk assets generally ended the month flat. Macro Read More
Not to mention, construction, HVAC, and electronic industries too.
Everyone’s getting in on it. Even you.
But how should you invest, and is it the right investment?
Well, let’s see.
Particularly during a market downturn, such as this, gold becomes an enticing investment. It’s an opportunity to protect and profit—to broaden your portfolio.
And with the right understanding about the stock you’re investing in, there’s no reason you shouldn’t join in on the forthcoming copper boom.
Let’s take a look at three primary ways to invest in gold.
Three Types of Gold Stocks (“Paper Gold”)
Gold Mining Stocks
If you’re not looking to get your hands directly on gold—look to gold mining stocks.
It’s a popular option for investors.
Investing in mining stocks is similar to buying any other stock. When you invest in mining stock, you’re investing in a share of a company that produces, explores, and mines for gold. It’s a liquid investment.
Keep in mind, however: it’s important to know the stock you’re investing in.
The success or failure of a mining company is dependent on their individual operating performance as well as the generating and deploying of their profits.
For this reason, gold stocks don’t necessarily move in accordance with bullion prices.
Ultimately, you won’t have the physical security of the gold if the company you invest in turns out unsuccessful.
You can, however, buy individual gold stocks or spread out the operational risk by buying an ETF that holds a basket of gold miners—an example being the GDX.
Gold ETFs means exchange traded funds, also known as closed-end funds.
Gold ETFs such as Gold Bullion Securities (LSE: GBS.L), SPDR Gold Trust (NYSE: GLD), and ETFS Physical Gold (LSE: PHAU.L) gives investors the opportunity to track the cost of gold through a fund. This simplifies the process of owning gold.
For example, a Gold fund provider may own assets, create a fund to mitigate their performance, and then sell shares in that fund to investors. Though shareholders may have a portion of an ETF, they don’t own the rudimentary assets in the fund. Nevertheless, investors in an ETF that track a stock index will receive lump dividend payments, or reinvestments, for the stocks making up the index.
Much like a share, an ETF can be purchased on a stock exchange.
However, on the contrary, ETFs track an index, a commodity, bonds, or a basket of securities; stock primarily focuses on one company.
A benefit to ETFs:
You can dodge the costs and hassle of markups, storage costs, and security risks that come with obtaining physical gold.
The downside to ETFs:
You’ll lose a percentage of the investment’s value annually to the fund’s ratio.
The expense ratio is the recurring annual fee charged by funds. This covers the cost of all administrative and management expenses.
Additionally, you’ll have to pay a commission to buy and sell an ETF. Most commissions are only under $10.
However, this may add up if you’re an active trader.
Though no longer a popular means to invest in gold, there’s always a gold certificate.
Gold certificates aren’t technically bonds. Moreso, it’s an official document that states you own gold that’s not in your possession.
Be wary though. Once again, it all falls on the integrity of the company you’re purchasing from.
If the company fails, just like that, your gold certificate becomes worthless.
Is the Latest Copper Investment Pick Right for You?
Latest Copper Investment Pick: Josemaria Resources ($JOSE / $JOSMF)
In the last years, there’s been very few new gold discoveries. For one reason, many theorize that we’ve reached "peak gold" production which is causing a rising challenge for the industry.
However, to counter this argument, many mining companies are turning to copper deposits to find gold as they are frequently found together. An example of this is Josemaria, one of the largest undevelopment copper-gold projects in the world. Boasting a reserve profile of 7 million ounces of gold, this leading mining company is located in San Juan Province, Argentina. Consistently, Josemaria Resources ($JOSE / $JOSMF) have acquired the largest mineral discoveries, developing them into major mines that spin out gold, copper, and cash year after year.
Many notable names are associated with Josemaria Resources ($JOSE / $JOSMF). The Lundin Family has been the driving force behind some of the top-performing mining development companies for years. In addition, the world’s top mining families everywhere are gearing up to cash in on it this company
Now’s the opportunity to make an investment worthwhile.
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