Let me make the disclaimer again: the information you’ll find below should not be considered as financial or investing advice. I am writing it with the sole purpose of sharing the information, so no warranties are made.
That being said I wanted to share some practical tips about the best ways to invest in gold. You should already have the basic theory covered, so let’s talk business. In my opinion the top 3 ways to invest in gold are:
1. Large Cap Dividend Gold Stocks
A large cap, or big cap, stock represents companies that have a market capitalization value of over $10 billion. These are the “big fish” in the financial sea. Large cap stocks are usually the more stable companies and when they pay dividends, they offer a fabulous way for an investor to receive passive income.
Two of the most popular large cap dividend gold stocks are Newmont Mining Corp. (NEM) and Barrick Gold Corp. (ABX). Newmont is an $18 billion market cap mining company based in Colorado. It is one of the largest gold producers in the world but it also mines other metals, including silver and copper. Newmont has operations or significant asset holdings on five continents. The stock has a yield of one percent and Newmont has paid quarterly dividends for the past 20 years.
Barrick is based in Toronto, Canada, and has a $24 billion market cap and one percent yield. The company has 25 operating mines and two projects under construction. It is the world’s largest pure gold mining company and produced 7.42 million ounces of the precious metal in 2009. Shares of Barrick are traded on both the New York and Toronto stock exchanges.
2. Gold Mutual Funds
As we now know, gold mutual funds are a great way to diversify an investment portfolio without using a lot of capital. Some invest only in the gold sector, while others also have holdings in areas like oil and gas. Those containing a mix of different commodities lessen their exposure to volatility.
The Wells Fargo Advantage Precious Metals A fund (EKWAX), formerly the Evergreen Precious Metals Fund, is one of the most respected gold mutual funds available. Between 1999 and 2009, this fund was up an average of 17% per year, compared to the 1.5% average performance of the S&P 500 Index. It consistently outperforms other gold mining mutual funds. The fund invests a minimum of 80 percent of net assets in precious metals-related investments.
This fund is managed by Michael P. Bradshaw, an individual well-known in the financial world. Investors must make a minimum initial investment of $1,000 and minimum subsequent investments of $100 to participate in this fund. As of August 20, 2010, the net asset value of this large growth fund is $82.78b and has been trending positively since late 2008. Its top holdings are Randgold Resources Ltd. ADR, Newcrest Mining Limited, Barrick Gold Corporation, Kinross Gold Corporation, and Eldorado Gold Corp.
3. Gold Bullion Coins
Incorporating gold bullion coins into the investment portfolio provides an individual with financial security in these uncertain economic times. The premium added to these coins makes them less effective as profit-generating devices than other investments in gold. If the bottom falls out of the U.S. currency system, those who hold gold bullion coins will have something of value to trade for the goods and services they need.
Merit Financial sells gold bullion coins for only one percent over the dealer cost. This is the cheapest place I’ve found so far for purchasing gold bullion coins.
Popular gold bullion coins like the one-ounce American Eagle, American Buffalo, Canadian Maple Leaf, and the South African Krugerrand are available on the Merit Financial Web site. The Austrian Philharmonic, claimed to be the best selling gold bullion coin on the planet, is also available. This coin is pure 24-karat gold and commemorates the musical heritage of the Austrian culture.
Investors wishing to spend a bit less money should consider the Swiss 20 Franc, French 20 Franc, British Sovereign, and Austrian Ducat. The Ducat has the distinction of being one of the only nearly pure gold coins struck prior to the Canadian Maple Leaf. Both the 4 Ducat and the smaller 1 Ducat are sold by Merit Financial.
To your success,