Steve Forbes, the editor in chief of Forbes magazine once said, “Gold is a constant. It’s like the North Star.” This precious metal is rare and doesn’t fluctuate like real estate or stocks, making it a good way to balance your portfolio. That all sounds well and good, but what are the best ways to invest in gold? Surprisingly, the “best” ways to get in the game are also oftentimes the cheapest, making it a smart investment that many people can get into. You don’t need to invest in physical gold, like bullions, coins, or jewelry. Physical gold requires storage and security costs, which most regular folks probably want to avoid. However, there are alternatives that still let you invest in gold and reap the benefits.
First, Some Definitions
There are two types of investment management: active and passive.
Active management means a team of highly-trained analysts and traders attempt to outperform the market by keeping an eye on which stocks to buy and which stocks to sell every day. In this case, it’s gold. Such funds usually run a higher fee, as the managers work diligently to ensure you own the investment with the most promise.
Meanwhile, passive management aims to match market benchmarks, not outperform them. A passive fund manager will not actively pursue the best stocks to buy or sell every day. Instead, they watch a pre-set group of financial vehicles. Thus, you will pay lower fees on a passive fund.
So, what are some of the best ways to invest in gold in 2021?
ETF stands for Exchange Traded Funds. These are a great way for beginners to start investing. First, Gold ETFs are much more liquid than physical gold, meaning that you can sell them whenever you want. Like stocks, their prices fluctuate throughout the day as they’re bought and sold. Second, ETFs are passively managed, so there are fewer fees associated with investing in them. Here is a couple of the best known Gold ETFs.
- SPDR Gold Shares ETF (GLD)
- VanEck Vectors Gold Miners ETF (GDX)
Gold Mutual Funds
Mutual funds, like ETFs, are easily traded. The biggest difference is that mutual funds are actively managed to try to beat the return of what a passively managed account would yield. What this means is that you might make more money with a Gold Mutual Fund, but you may also incur more fees and expenses due to the active management. Still, many like the idea of having a professional manager guiding the fund.
Look into these funds that are among the best precious metal equity companies according to US News & World Report.
- Invesco Gold & Special Minerals Fd
- First Eagle Gold Fund
- Franklin Gold and Precious Metals Fund
- US Global Investors Gold & Prec Mtls Fd
- VenEck International Investors Gold Fund
- Wells Fargo Precious Metals Fund
Gold Mine Stocks
Investing directly in the stocks of gold mines is another option. Doing so is easy as well; you can buy the stocks through your brokerage account. Three well-known gold mining companies are.
- Newmont Corp. (NEM) – this is the largest gold mining company in the world, with mines in North American, South America, and Africa.
- Barrick Gold Corp. (GOLD) – with over 13 mines in the world, Barrick is Canada’s largest gold mining company.
- Franco-Nevada Corp. (FNV) – they don’t own gold mines, but they buy the rights to royalties. Royalties are basically contracts that give the owner a percentage of the gold production.
With a little research, you can get into this steady game in no time. Fortunately, online searches can help you find smart investments as well as strong companies that can help you grow your wealth. The best companies help education — not just take your money — so do your research before investing.