Gold Trading Guide: A Beginner's Approach to Investing in Gold

Investing in gold commodities has been an established investment method for many years. Gold has been sought after for centuries and does not show any signs of slowing down in the future. Here are the basics of how to trade gold and what it can do for you as an investor.

Physical Asset

The first, and most basic, way that you can trade gold is to purchase the physical asset and warehouse it yourself. Many people purchase gold, store it, and then resell it at a later date. This is the most tried and true method of gold investment that the world has to offer. The benefit of this type of investment is that you are purchasing an asset that will always have some sort of value. Regardless of what happens in the financial markets, you should always be able to sell gold for some amount of goods or services.

The physical asset gives you some form of security in the financial markets. The downside to this form of investment is that it is risky. Keeping large amounts of gold in your own possession can lead to dangerous conditions for you and your loved ones. If word got out that you had a significant amount of gold, it would only be a matter of time until someone tried to steal it. Due to safety concerns, many people turn to other forms of gold investments.

Gold Certificates

Many investors prefer to directly purchase gold, but do not want to worry about the warehousing. Gold certificates are alternative investment methods. There are many companies that will warehouse your gold for you and give you a certificate that shows that you own a certain amount of gold. These facilities are often very secure and will warehouse a large amount of gold for many different investors. The good thing about this type of investment is that you do not have to watch over the gold yourself. The downside is, you really do not have any control over what happens your gold.

Gold ETF's

A newer form of investment that has come along in recent years is the gold ETF.  The term ETF stands for exchange traded fund. You can buy and sell shares of a portfolio through the stock market. A gold ETF is managed by an investment company and they purchase large amounts of gold and gold contracts. They may not actually house the gold themselves, but they do purchase gold interests. As an investor, this provide you with a very easy way to access the market. You can utilize this investment, or any standard brokerage account, and sell the shares quickly if you need to. The downside to this investment is that you may not be able to take full advantage of large price increases in gold because the investment is diversified.