There are many reasons investors around the world turn to gold, but one major factor driving gold as a “last resort” investment is climate change. For those who live in especially vulnerable parts of the globe, such as India (where gold is already a popular investment for underbanked families), gold may be the only thing of value they can take with them when they become climate refugees. Even in the United States, rising sea levels threaten to swallow up coastal cities. Gold will likely turn out to be a much longer-lasting investment than buying a seafront condo in Miami Beach, with constant flooding and rising sea-levels threatening to submerge up to half-a-million homes in Miami.
With so much valuable real estate suddenly made vulnerable by rising sea levels, investors are looking for other alternative investments, including gold. There are several different ways you can invest in gold. The right way for you depends on your goals and preferences.
1) Gold Coins
Gold coins are the most popular and easily exchanged type of gold investment. The most liquid gold product is probably the 1 oz. gold coin, though depending on where you live, the market may have a preference for coins from different mints. For example, while the American Gold Eagle is the most popular coin domestically, European markets may prefer the Austrian Philharmonic while the Australian Kangaroo and Canadian Gold Maple Leaf are popular in the Hong Kong and Singapore gold markets.
2) Gold Bars and Rounds
Gold bars and rounds offer many of the same benefits as bullion gold coins, but they can often be found at even lower premiums. Gold bars are made by private refiners – companies like Credit Suisse, Valcambie, and Johnson Matthey produce gold bars for the investment market. The typical gold bar is, like coins, a thin, 1 oz. piece of 9999 fine gold (i.e., 99.99% purity).
High net worth investors may be interested in larger size bars, such as 10 oz. bars or even 1 kg. bars that can greatly reduce the premiums you have to pay for gold coins. Gold bars are an economical way to store wealth.
3) Gold ETFs
Exchange Traded Funds are an easy way to invest in gold if you don’t want to store and insure physical gold bullion. You invest in a company that owns the gold. Unlike a mutual fund, ETF stocks trade freely, though they still come with fees, and the benefits over physical gold bullion may be outweighed by the risks.
You can read more about how gold coins and gold bars are generally considered superior to ETFs because physical gold bullion eliminates third-party risk. There are also issues with gold leasing, a practice of major banks that has artificially inflated the amount of paper gold circulating beyond the amount that has actually been extracted from the earth.
4) Gold Mining Stocks
Finally, you can invest in the production of gold. This may not be the most desirable way to own gold either, as mining companies are notoriously poorly managed, especially after a raft of mergers bloated debts just as gold prices collapsed in 2013. It is almost always a better idea to invest in the finished product than stake your money on the competency of a company to produce gold cheaply.
Investing in gold is a smart move for anyone concerned about the future. There are plenty of ways to invest. Find the one that’s right for you.