Featured | May 12, 2010 | 0 Comments

3 Ways to Capitalize on Gold Through Investment

Gold continues to be strong . . .

When currency starts to get weak, people naturally look to gold. In the old days, gold backed the US Dollar. Some people still think this is the case. Sorry, these days currency is backed by expectation of value.

So what is the best way to secure capital in gold for the typical investor? Today, I’ll present you with three of the usual suspects. The last method is one I recommend back in 2007. Had you invested at that time, your investment would have grown by over 100%.

Gold Coins & Tangible Items

The first thing that comes to mind to many when thinking of gold investing is pirate treasure. You know, X marks the spot. Actually, that’s not too far off from our first investment vehicle.

Securing gold coins and other tangible items is one method of gold investing. The problem is that there’s usually a significant markup in acquiring the gold items and there will be other expenses along the way (storage, security, etc).

If you’re looking to keep the gold for a very long time, this could be a route to take. For many gold investors though, it’s problematic.

Gold Mutual Funds

A more realistic way to capitalize on gold for most investors is through mutual fund that are geared towards gold in some fashion—ownership, mining, etc.

If you’ll be using a small amount of capital, this method might not work too well. Most mutual funds have a minimum investment of $2,500 – $5,000. While this isn’t usually what we’d consider a large investment, it can be a hassle to some.

Here are two examples of gold mutual funds:

• USAA Precious Metals & Minerals (Symbol: USAGX) – $2,500 minimum investment
• Fidelity Select Gold (Symbol: FSAGX) – $2,500 minimum investment

Gold Exchange Traded Funds

Here’s the best way, in my opinion, to invest in gold. This is how I’ve made money with gold investing. By the way, if you’re not familiar with exchange traded funds, click that link to read an article I wrote about them. There are multiple ETFs with a gold focus, but my favorite has been GLD.

In fact, back in July 2007 I talked about investing in a particular gold exchange traded fund. Since that discussion, it’s grown by over 100%.

Here’s a clip of what I said about it:

Of the five I reviewed, GLD is the strongest and has the most potential. The Fund (GLD) is designed to be an effective investment vehicle for investors who want a cost-effective way to invest in gold bullion.

At that time, GLD was trading around $61. Today, it’s around the $122 range. and up about 10.58% on the year.

Some gold exchange traded funds:

• SPDR Gold Trust: SPDR Gold Shares (Symbol: GLD)
• Ishares Comex Gold Trust (Symbol: IAU)
• Market Vectors Gold Miners (Symbol: GDX)
• Powershares Db Gold Fund (Symbol: DGL)
• Powershares Db Precious Metals Fund (Symbol: DBP)

These are all three effective ways of investing in gold. I recommend looking into exchange traded funds.

Got any thoughts or ideas about gold investing or this article? I’d love to hear them. Do you invest in gold? Have you thought about it? What do you think would be the most effective way to invest in gold?