While the precious metal market may be one of the more traditional financial establishments, it remains an evolutionary entity that is liable to change gradually over time. These changes are triggered by a number of social, economic and political factors, although government involvement is usually a significant influence. This was underlined by the Government of India (GoI) recently, which has created a number of initiatives and gold-related investment schemes in recent times. Such programs are commonplace throughout the developed world, and this is a trend that it is likely to continue for the foreseeable future.
The Main Vehicles for Investing in Gold
In addition to this, technological advancement and online outlets such as BullionVault have also made gold and the precious metal market more accessible to standard investors. This has created a number of variable options and viable investment vehicles, including the following:
Gold Exchange-traded Funds
Historically, direct ownership was the dominant method of investing in gold. While this helps to create a secure store of wealth, however, it is at odds with the fluid nature of the derivative market and its huge, margin-based returns. In this respect, the option of trading gold exchange-traded funds has emerged in recent times, as this combines the benefit of direct ownership and mutual fund investment. An exchange-traded fund is a stock market concern that offers a practical and fluid way to hold gold in an investment portfolio, and it is certainly worth consideration for those with a risk-averse and conservative approach.
Gold Mutual Funds
On a similar note, a mutual fund offers investors the opportunity to move away from the principle of direct ownership completely. These funds still provide exposure to gold, however, as they deliver a portfolio of stocks that are involved with the mining, storage and distribution of gold. Each portfolio will vary depending on the nature of the stocks included, from senior options for companies with independently owned mines and proven track records to those that are lower priced but packed with potential. The combination that you select will be influenced by your appetite for risk and the level of return that you ultimately desire, and this is generally considered to be an option that offers moderate risk.
Junior Gold Stocks
These speculative, lower-cost options are known as junior gold stocks, and they represent a dream opportunity for aggressive investors. These stocks are less likely to own their own mines or possess substantial financial resources, but those with potential or an opportunity to grow may be able to deliver inflated profits and higher returns over time. There is also a broader range of stocks and market options, and while investors in this category must flirt with the risk of losing capital they can also bask in the potential of triple-digit gains. Despite a considerable market decline in the wake of the great recession, this market remains financially strong and is continuing to expand at an exponential rate.