Physically buy gold bullion
Perhaps the most obvious and simple method for investing in gold is physically purchasing the precious metal. In Australia this will likely require dealing with The Gold Corporation, or The Perth Mint which is owned by the government of Western Australia. Here you are able to purchase bullion coins and bars. But purchasing gold directly might incur extra costs that will go against the investment.
The mint will charge fees to turn raw gold into coins and other forms. This can add up to 15 percent more onto the price of gold. As well, the question of where to store your gold also becomes an issue. If you choose to leave your gold at the mint, this is another cost. One alternative is to buy unallocated gold. This means the mint will only produce your bullion on request so you need not pay on-going storage fees. Still, with the higher price of ownership as opposed to the spot price of gold, and the danger of safeguarding it, this option will need to be weighed carefully.
Gold Instruments on the Exchange
Another method is to purchase gold through the stock and commodity exchanges. Gold Bullion Securities can be purchased on the ASX. One example is the ticker symbol GOLD which represents 1/10th of one find troy ounce of gold. Or you may choose to buy a warrant known as ZAUWBA on the ASX which is a gold investment through The Perth Mint which denotes 1/100th of a troy ounce. While they are similar, ZQUMBA allows for the conversion directly into gold that you can bury in your yard, while the purchase of the ETF GOLD will only give you the cash value of your purchase. If you have no intention of actually having the gold, GOLD will be a slightly cheaper option. If you wish to acquire the physical gold at some point, ZAUMBA will be a better choice. Also note that ZAUMBA has an expiration date that needs to be met.
A wide variety of gold based ETF’s (Exchange Traded Funds) exist. Keep in mind that there are two major types: gold itself and gold companies. One is the commodity and the other is the company that explores or mines it.
Gold Stocks on the Exchange
Gold stocks cover such a gamut that it makes the topic difficult. One gold stock might consist of a few scientists speculatively looking for gold deposits. Another company might be in full production with a massive mine. One company might sell for spot prices while another hedges their prices through futures contracts. Should one invest in gold based companies?
There is a two-pronged issue to consider with gold based stocks. One is that even if gold remains the same in value the stock has the ability to grow in share price. Gold priced at over 1,000 dollars per ounce makes for a very lucrative mining business. But the other side of the bullion coin is that a stock could go bankrupt, or run out of deposits to mine, along with a host of other problems while gold itself keeps its value.
Example of gold stocks you can invest in are (Australian Stock Exchange, ASX) Lihir Gold (LGL), Newcrest Mining (NCM), Avoca Resources (AVO) and Newmont Mining Corporation (NEM)
Gold price in Australia Today (Live): /Coming soon