Investment experts recommend investing in gold through a variety of avenues, including exchange traded funds, shares of mining companies, futures contracts and derivatives contracts. Some simply purchase and store gold itself. Each of these strategies comes with unique benefits and risks that are not suitable for all investors. Public interest in gold investment has spiked in recent years, creating both opportunity and risk.
Gold prices have escalated over the past several years due to investor concerns about leading currencies and future inflation. The growing number of investors buying gold assets has contributed to the rise in prices. This inflation has created a big opportunity for buying shares in gold mining companies. Gold mining company share values are expected to rise proportionately to any increases in the value of gold. This creates a leveraged bet for the investor.
There are many exchange traded funds that invest in gold mining and gold-related stocks, which offer investors with limited capital resources the opportunity to diversify. Many experts advise that owning the commodity itself is worthwhile, because the costs of storing the gold are less than the fees charged by many exchange traded funds. For those with a high-risk tolerance, gold futures are worth considering. They offer high rewards due to extreme leverage, but they can also quickly lead to an investor's entire principal being wiped out.