What Are Top Gold Products You Must Own in 2021?
What Are Top Gold Products You Must Own in 2021?
Gold is an item that has always been considered valuable and a good investment option. Some people buy gold in the form of jewelry only for its beauty and prestige. But most people purchase gold because it’s a great way of holding your savings, and increase its value over time.
Gold has a very important place in the world economy. Since ancient times, this metal has been used for making jewelry and issuing valuable coins as a medium of exchange.
Another reason why gold was held in such a great value was that the metal was not easily dug out of the ground. The difficulty involved in obtaining gold translated into its intrinsic value.
The Reason Why Gold is So Valuable –
After the discovery of gold and its early usage, people began using it for trade and business. Later on, people also discovered that since gold can remain valuable over a long period of time, it could also be used for storing wealth.
Early paper currencies used to be backed by equal amounts of gold. This meant that each note that was issued by a central bank had an equal amount of gold backing it. This gold was held in the vaults of the currency-issuing authority.
The phenomenon of gold-backed currency is no more in use, yet people all over the world still prefer buying and storing gold for an obvious purpose.
New we will discuss what are top gold products you must own in 2021?
Gold Jewelry –
Gold jewelry is always in demand. Women like to wear it and flaunt it in parties and functions. The value of gold in the form of jewelry cannot be denied however, it must also be noted that the value increase of golden jewelry is relatively slow. For a person who his planning to buy gold jewelry solely for investment purpose, jewelry may not be a good option.
The above assessment is based on the assumption that the gold jewelry in question is made of 10 karat gold and not 24 karat, which is the metal’s purest form.
If you go for gold jewelry made of 24 karat gold, it will be very expensive. Such jewelry will not only hold its value but also show a good increase in value. Another aspect of investing in high-quality, expensive gold jewelry is that it becomes a collector’s item, and may also show a value increase over time due to this reason.
Gold Coins, Bars and Bullion –
If you ask seasoned investors, the best way of investing in physical gold is purchasing gold bullion, coins, and bars.
Without contesting this idea, we may safely assume that there is a price involved in converting gold from its raw form into a coin. This cost is always transferred to the end-user. Another point to note is that the person from whom you are buying gold bars or coins will ask you to pay a service charge. This is a kind of fee for acting as an intermediary.
If you want to purchase gold for investment purpose, you would prefer buying it without these two associated costs. That is why it is advisable to always purchase physical gold in the form of bullion from a government-regulated entity.
Holding physical gold is also a problem for most people. In most cases, it would mean paying an extra cost for securing a locker. Even this would be a recurring cost that will increase your cost of investment. Another issue with physical gold is transportation. Whenever you plan to sell it, you will need to take this gold to a dealer for assessment.
Gold Bonds / Gold Certificates –
This is a good option for investors who want to put their money in gold without having to deal with the metal in its physical form.
Gold certificates are issued by a company that holds the metal in its physical form. The certificates or notes thus issued are not associated with specific gold allocations. However, any company that issues these certificates makes sure that it has enough gold backing for all of them.
If you are seeking to buy certificates that have gold value allocations, you will be required to pay more money.
One drawback with owning gold certificates is that its value depends on the goodwill of the issuing company. This makes Perth Mint as one of the most popular gold certificate issuing company being backed by the Australian government.
Gold Futures Contracts –
One way of buying and holding the metal in an indirect form is through futures contracts. This kind of product is mostly undertaken by seasoned investors owing to the high risk associated with it.
A futures contract is a kind of agreement between two parties: a buyer, and a seller. Both of them agree to buy and sell an amount of metal at a particular date, and at a specific price.
The fluctuation in gold’s price sees a proportionate increase/decrease in the contract’s value. This price fluctuation is reflected in the simultaneous adjustments within the buyer and seller accounts.
Future contracts are usually traded through an exchange broker.
The investor does not need to pay the entire amount of the contract at the time of purchase. This increases his leverage manifold. He can make extremely high gains by investing only a fraction of the total amount. On the downside, he can also lose huge amounts of money through the same contract because the exact date for payment is put down in the contract in the beginning.
The above are only a few gold products. You can also purchase shares in gold mines, and also invest in the metal through gold-specific mutual funds.
Jewelry still constitutes the highest demand for the yellow metal. Investors who prefer to buy gold in physical form are ranked second. These are usually individuals and banks.
The concept of gold-based exchange-traded funds is rather new. These funds would purchase gold on behalf of their investors. One reason for gold’s extraordinary demand is that most people believe if there is a recession which renders paper money worthless, gold’s value will still remain intact.
This is the most important reason why we see a surge in gold prices when financial markets take a downturn. Gold consists of a hedge against currency devaluation.
No matter what your reason for purchasing gold, you can do it through one of the many ways listed above. The option you choose depends on your reason for investing, your investment holding power, and the tenure for which you want to hold onto your gold.
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