stock market basics for beginners | How to buy gold on the stock market

How to buy gold on the stock market

Gold is one such commodity which is most favored by investors as a safe haven against all the stock and currency fluctuations. The Euro crisis is causing a lot of pressure on the currencies all across the world and the investors are flocking to buy gold as something to hold on in these testing times.

Now you can buy gold in a number of forms however the easiest way is to buy gold from the stock market. In this article I will explore the ways by which you can buy the gold on the stock market.

Buying gold stock – There are a lot of golf mining and predicting companies which have their stocks listed on NYSE or TSX. These stocks typically move in tandem with the price of gold. The reason is that any increase in the price of gold straight away goes to increase the profits of these companies. The reason for this being that they have a relatively fixed input costs and any increase in selling price increases the profit margins of these companies.

Now investors need to be aware that there are senior god stocks and the junior gold stocks. The junior gold stocks are much more volatile and risky, so for long term bets it is better to go for senior gold stocks like Kinross Gold, Yamana Gold, Barrick Corp. or Gold Corp.

Gold ETF

The gold ETF’s in simple language are shares which track the spot price of gold. So the price of the Gold ETF is basically the price of physical gold. The two major gold ETF’s which are a must have in case you need to buy gold in the stock market are SPDR Gold Trust (NYSE: GLD) and the other is iShares Gold Trust (NYSE: IAU).

GLD price per share is 1/10th of the price of gold and IAU price is 1/100th the price of gold.

These ETF’s can be bought as stock on the NYSE and they are very liquid. The benefit of owning these is that you do not have to worry about the storage of physical gold as these ETF’s have the underlying gold which is held by them in the storage across the world.

Gold Futures – Futures is a risky thing and I would suggest that as regular investor you just stick to gold stocks and ETF’s. For futures you need understanding of buy and sell side and even the way the CME works.

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