Investing In Gold:
The Best Ways to Make Money
After enjoying record investment demand in 2020, gold investments (including coins, bars, and EFTs) fell by 60% in the first half of 2021. In the year’s second quarter, however, demand recovered somewhat to reach around 955 tons — which is about the same level as the same period last year. Gold has long been considered a popular “safe haven” investment, which holds its value against inflation. When it comes to investing in gold, there are a number of ways to do so depending on your preferences and tolerance for risk.
Instead of mining for gold, streaming companies pay miners up front for the ability to purchase gold at lower rates in the future. In turn, miners can use this capital (usually for expanding or constructing new mines) without having to take out loans. For example, Royal Gold recently secured a streaming deal for gold at 20% of its spot price and 40% once set production targets are reached. As a result of this unique and effective arrangement, gold streaming typically results in continuously wide margins even when the market’s tough. Streaming companies can be selective about their agreements and are usually less affected by price downturns, therefore allowing them to offer investors a more stable investment in gold and silver.
Unlike regular IRAs, gold IRAs let investors hold gold along with other precious metals like palladium, platinum, and silver. They’re a great way to diversify standard IRAs with physical, durable assets instead of the usual paper assets like stocks, bonds, and mutual funds — which in turn gives investors greater control of their investments. Since it’s generally a non-liquid, long-term, buy-and-hold investment, gold nicely complements IRAs, which are usually only accessed upon retirement. Gold IRAs also come with the same tax benefits as regular IRAs, including tax write-offs for contributions. A custodian (aka an IRS-approved financial institution) can help investors open up a self-directed IRA, which the investor manages themselves. For example, Advantage Gold is a precious metals broker that works as custodian of the account and makes sure the assets are kept safe in secure and approved storage.
Gold options are options contracts with the underlying asset being either physical gold or gold futures. These contracts provide investors with the right to buy or sell gold at a set price for a set period of time (doing so isn’t, however, an obligation for investors). With gold options, investors have an easy way to invest in gold for less than it costs to purchase physical gold or gold futures. Options can be sold at any time with the sole risk being the initial price paid to enter the contract.
Gold is a popular investment as it remains steady throughout economic periods of flux and uncertainty. Gold streaming companies, gold IRAs, and gold options are some of the best ways investors can make money with this precious metal.