What Options a Gold Trading Company Typically Offers

On November 2009, gold trading companies sold gold at a record high price of $1409.26 per ounce. Many of us, especially those who have started trading in recent years, may not remember that on April 2, 2001, the price of gold was $255.95. However, the steep fall in the dollar value in the global currency market and inflation have given gold prices a major push. Another factor that accounted for the rise in the price of gold is its ever increasing demand.

gold tradingGold Trading Company: What are the Major Investment options?
Those who are looking forward to invest in gold must check out all the options a gold trading company has on offer.

Gold-Mining Stocks: It is not uncommon to see gold-mining stocks rising above the price of the metal itself. When one invests in a gold-mining company, one does not receive any gold. Rather one owns stocks. For those who do not have much confidence in the US dollar gold-mining stocks are not a good option.

Collectible Gold Coins: US gold coins, especially collectibles, have attracted a lot of attention for centuries now because of their intrinsic beauty and rarity. The editor of Coin World, Beth Deisher, says, “You need to understand coin grading and have some idea of where the coin market is trading.”

It is important to consider that grading of gold coins is crucial as gold in coins has a high markup over bullion value. For instance, a 1925 Saint Gaudens having a Denver mint mark sells at  $7,250 when its graded MS 62. However, its price shoots up to $13,500 at MS 63. Both are uncirculated grades and a novice may not be able to judge them on the basis of grading. Also, the storage of gold coins is a big concern for collectors.
The following are the major coin graders:

•    Professional Coin Grading Service
•    Numismatic Guaranty Corp
•    American Numismatic Association Certification Service

Gold Bullion Coins: The US government also sells gold coins that it produces. These are called gold bullion coins. In fact, governments of various developed countries issue their gold coins. The United States Mint issues the Gold Eagle that comes in various denominations. The size varies from 1/10 of an ounce to 1 ounce. Eagles are 22-karat gold and have copper mixed to increase their durability as gold is softer and gets dents easily. The biggest advantage of investing in gold bullion coins is that you do not have to test them for purity and can carry them anytime anywhere. Considerations associated with buying gold coins include their storage and insurance.

Gold funds: Investors who are interested in a diversified portfolio think of investing in gold mutual funds as an option. The following are some of the best performing funds over the last few years:

  • Van Eck International Investors Gold (INIVX)
  • USAA Precious Metals and Minerals (USAGX)
  • Oppenheimer Gold & Special Minerals A (OPGSX)

However, before investing in gold funds, it is important to know that these are highly volatile. Also, you have to pay management fees.

Gold ETFs: These come in two forms, first that buy gold bullion and second that do not. The first option lets you own gold without worries of sorting, buying or selling it. SPDR Gold Shares (GLD) is the biggest dealer of physical gold ETFs in the US. However, as these are frequently traded, you may end up facing frequent losses.

The option a trader should choose depends upon the size of his capital, how long he plans to hold his investment and reasons to invest in gold. Also, it is important to choose a reliable gold trading company before making an investment.