Gold and investment opportunities

Investing in gold is a refuge for some investors in bad times. You have three options for investing in gold.

There are several ways to invest in gold. The most traditional form of investing in gold is its physical possession. You buy a few grams of this yellow metal, coins or gold jewelry and hide it at home in a jewelry box or under a mattress. Another way is open-end mutual funds.

Why own gold?

From time immemorial, gold has been a natural asset through which people save money. If you see similarly, you should save part of the property in this precious ore. You just have to figure out how much of the property you want to have in gold. We warn in advance against a purely gold portfolio. Even when buying gold, it is appropriate to diversify and buy investment gold as well as other capital market instruments.

Gold has a double meaning in personal finances. The first is the already mentioned deposit of property, which also serves as a financial reserve. The second significance lies in speculation on the appreciation of this metal and its possible future sale.

Both options are not mutually exclusive and complement each other appropriately. Even with the planned speculation on the growth of value, in order to sell gold sometime in the future, you can change your mindset and keep gold as a reserve for worse times.

Gold on the stock exchange

The first and relatively difficult way to profit from gold is to buy directly on the gold exchange. The two biggest reasons, which are insurmountable for a small investor, speak against it. One of them is money. You need a larger amount of money to trade on the stock exchange. The requirement is an amount in units of at least one thousand dollars. The second barrier to entering the stock market is that you have to become a trader. This requires legislative treatment, as well as additional capital. The stock exchange is thus an unattainable goal for a retail investor.

Gold fund

The second option, which is more feasible for a small investor than the stock exchange, is the purchase of unit certificates of commodity mutual funds. In the Czech Republic, gold is directly targeted by the Golden Fund, which is offered by the investment company ČP Invest. As stated in the fund’s prospectus, money from retail investors is invested in the purchase of shares in companies engaged in the mining, processing, transportation and sale of gold. The advantage is that the fund does not buy gold directly, but only shares of companies that work with it. For example, if the gold bubble collapsed and gold reached its price lows, but the volume of demand was maintained, it should have no effect on the value of the units.

Other commodity funds, in which you can invest in the Czech Republic, also have a “golden component”. For example, the ČSOB Commodity Fund can be mentioned at random. Investments in gold are not as dominant in these funds as in the case of the ČP Invest Gold Fund, which focuses on gold.

Saving in gold

The last type of investment in gold is the direct purchase of this precious metal. You can buy it in ingots and have them sent home or leave them at the merchant’s safety deposit box. A specific type of this investment is buying a larger ingot without physically owning it. Basically, you buy a share that you can settle at any time – either sell it or turn it into an ingot that corresponds to the quantity already purchased.

When saving in gold or investing in mutual funds, count on fees. Especially if the investments are prepaid. In practice, this means that you pay a fee for the first few purchases.

Gold continues to be an interesting commodity in which to save some money. But don’t overdo it too much, as you should have your financial portfolio as diversified as possible.