Buying gold funds Stocks are listed on the New York Stock Exchange and can be bought or sold at any time of the trading day, just like stocks. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions achieve financial freedom through our website, podcasts, books, newspaper columns, radio programs and premium investment services. Investing in the shares of companies that extract, refine and trade gold is a much simpler proposition than buying physical gold. Since this means buying stocks from gold mining companies, you can invest using your brokerage account or through a Gold IRA broker. On the contrary, the owners of a business, such as a gold miner, can benefit not only from the increase in the price of gold, but also from the company's increase in profits.
Depending on your preferences and ability to assume risk, you can choose to invest in physical gold, gold stocks, gold ETFs and mutual funds or speculative futures and options contracts. Gold mutual funds, such as the Franklin Templeton Gold and Precious Metals Fund, are actively managed by professional investors. The VanEck Vectors Gold Miners (GDX) ETF, on the other hand, is a passively managed fund that tracks an underlying basket of stocks of gold mining and refining companies. These factors can allow gold mining companies to increase their profits, allowing their stock prices to exceed the price of gold.
You can also choose to buy gold that you can use or that someone once used but that has been damaged in the form of gold jewelry. A gold ETF offers extensive exposure to the sector by owning shares in gold or physical gold mining companies. However, keep in mind that gold company stocks are correlated with gold prices, but they are also based on fundamentals related to each company's current profitability and expenses. Buying gold stocks instead of physical metal has many benefits to take advantage of the advantages of investing in gold.
Finally, investors who don't want to try to identify the best individual mining stocks may consider buying shares in gold ETFs, which are more practical and profitable options for investing in gold stocks. Three of the largest ETFs include SPDR Gold Shares (GLD), iShares Gold Trust (IAU) and the Aberdeen Standard Physical Gold Shares (SGOL) ETF. This contrasts with the owners of a business (such as a gold mining company), in which the company can produce more gold and therefore make more profits, increasing investment in that business. If gold moves against you, you will be forced to contribute significant sums of money to maintain the contract (called margin) or the broker will close the position and you will suffer losses.
New gold discoveries in Mali have increased the West African country's gold reserves to 881.7 tons by the end of October, or about 15 years of production at current production levels, an official from the Ministry of Mines reported Friday. Since Franco-Nevada can profit from gold mining without exposing itself to the risks of mining development, its shares have historically surpassed the price of gold and other gold mining stocks.