However, storing physical gold can be cumbersome and costly. Fortunately, there are several ways to own gold without having a physical stash. The largest funds in this sector include the VanEck Vectors Gold Miners (GDX) ETF, the VanEck Vectors Junior Gold Miners (GDXJ) ETF and the iShares MSCI Global Gold Miners (RING) ETF. Other investments in gold, such as mutual funds and Silver and Gold IRAs, can be made in smaller dollar amounts than bullion and may also not have as much direct price exposure as bullion. Examples include ETFs, mining stocks and even the ability to buy stable currencies such as Gold Coin, a cryptocurrency linked to the value of gold.
On the other hand, ingots held in smaller bars and coins provide much more liquidity and are quite common among gold owners. What many people don't know is that gold is actually very liquid; that is, it can be bought and sold relatively quickly due to high demand. The main problems with gold bars are that storage and insurance costs and the dealer's relatively high profit margin hinder profit potential. While heavy gold bars are an impressive sight, their large size (up to 400 troy ounces) makes them illiquid and therefore expensive to buy and sell.
Gold bars must be certified for weight and purity and usually have a serial number attached for safety reasons. Investing in gold isn't for everyone, and some investors continue to bet on companies with cash flow instead of relying on someone else to pay more for the shiny metal. That said, many investors find this method to be very rewarding and one of the best ways to invest in gold. There are fees associated with buying and selling gold through ETFs or mutual funds, but they tend to be much lower compared to managing other assets.
Today, investors buy gold primarily as a hedge against political instability and inflation due to gold's low correlations with other asset classes. Since gold has historically shown a low correlation with other types of investment assets, many investors include gold in their portfolios as protection against potential economic downturns. Investing in these types of companies can be an effective way to make a profit from gold and may also entail lower risk than other investment methods. Investors like gold for many reasons, and it has attributes that make this commodity a good counterpoint to traditional securities, such as stocks and bonds.
Investing in gold mining companies is an interesting way to combine gold investments with traditional stocks.