How Much Gold You Sitting On?
War teasers between the US and Iran have goosed the price of gold to well over $1500 per ounce, seven-year highs! Gold is a metal which doubles up in many investors’ minds as not only a store of value, but a hedge against incompetent central bankers, hyperinflation, and the end of days. It’s been a portfolio mainstay since 4000 BC, but there are many ways to get your hands on it.
A gold bug’s simplest option to get plated up is through an exchange-traded fund (ETF) purchasable through a typical trading account. The iShares Gold Trust (IAU) would be a flagship example, its movement tracking the current ‘spot’ price of gold to within 1%. Brilliantly liquid, IAU lets you get out before things turn ugly. Brilliantly cost-effective for someone to just stand guard at a vault, there’s no superstar fund manager fee to contend with.
A gold bug’s coolest option, though, is to hoard the physical bullion itself. Best known for lining Hollywood bank vaults and gangster rap videos, you can hold bullion in your hands as ingots, bars, or coins. The value of a golden bar perfectly tracks the spot price of gold, but larger lumps of precious metal do beg add-ons like storage, insurance, and handling.
A range of reputable retailers offer next-day delivery for bullion, but here’s a tip for you. Mints, which stamp bullion, have tailored their supply pipelines for the subdued metals markets of 2014-2019. Heads up, that could exacerbate historic shortages of gold bullion during peak times of demand. So, order early to avoid disappointment (or having to pay a massive premium)!
After taking a few selfies with your ingots, burry them in the garden. If you want to lever up and get more extreme gains (or losses) from your gold, seek out ‘numismatic coins’ which are popular among collectors.
A gold bug’s gutsiest option is not to buy actual gold at all, and instead, to opt for ‘paper gold.’ This isn’t a hedge as much as a money-making ploy, with investors diversifying into shares of companies that go spelunking and mining in the gold industry. Many factors can obviously affect stock prices, so as a trade-off for owning a productive asset that might even pay a dividend, market players sacrifice spot price accuracy in tracking their treasure!
A gold bug’s final, riskiest, option is to take a punt on ‘e-gold.’ Brace yourselves! As an unregulated ‘digital gold currency,’ e-gold aims to reverse the Nixon shock and take us back to before 1971 when it was possible to pay for a loaf of bread with 24-carrots. Unsafe haven or a stroke of genius?
In sum, unstable times loom, and a wave of investors are speculatively blessing the shiny stuff. Could 2020 be a golden year? It remains to be seen, but as a tried-and-tested portfolio anchor, it needn’t be too difficult for you to get your hands on anymore!
