How to invest in Gold ?

jon3001

russell_anderson wrote: »

Yes, I understand that but it's seems still completely illogical to me that if gold is shooting up the stock price of companies mining it will go down! After all, it's not as though I'm investing in a mining company directly but a unit trust which holds a spread of companies and assets.

Maybe they sold all their gold production at a much lower price on the futures market last year.
Maybe the companies have heavy debt due to setting up new mining operations which won't come into production for years to come.
Maybe they're mining in the former Soviet Union and their license is subject to being revoked if they don't cough up bribes.
Could be any number of reasons...

Stocks are in a sell off right now. Even if the company is profitable with good fundamentals their share price will be under fire in the short-term.

fairleads

Mishomeister wrote: »

I am thinking of investing in gold.

Gold is essentially an insurance/hedge against market turmoil/collapse, a safe haven if you like. So if you feel the need for that insurance, you buy it - but there is always the chance that the cost might be more than you bargained for.

Geoff23

Mishomeister wrote: »

I am thinking of investing in gold. I have never done it before but still believe it will provide a better return for my £5000 savings, than my Cash ISA with 3%APR. I am looking for some newbie guides on how to start, which firm to use to buy it. So which are a reputable firms? I have done some research on Google and found a few articules with tips and recommendations, but not sure how trustworthy they are. All I am looking is a newbie guide, suitable for someone living in London and list of reputable firms to buy it from.

You may have left it too late. The best place (IMO) to get gold online in the UK was BullionByPost, but they have been so overwhelmed with orders over the last few days that they have now (this morning) indefinately stopped taking orders for both gold and silver. You will find other places still selling, but most of them have waiting periods of weeks or months before they can fulfil orders, or are charging considerably higher prices for what stock they have left.

As for whether it will do better than your cash savings accounts or ISAs? I think you already know my answer to that one.

It is still possible that price of gold is going to dip before the next big leg up, because there are people out there who may be forced to sell their positioins in order to release cash or make up for losses elsewhere. So it may become temporarily easier to get hold of bullion before it gets even harder.

Geoff23

Jegersmart wrote: »

Buying gold is very much like buying a single company share in terms of outright risk. Gold could easily lose half its value in a very short period if money flows out into something else

What else could it flow into, given the current global financial/economic situation?

Geoff23

russell_anderson wrote: »

I bought £2000 of BlackRock Gold & General Accumulation Units on July 21st as I believed the Stockmarket was heading for disaster. This proved to be correct but whilst Gold has gone up by 8% so far this month, my units have gone down by 10%!!!!!! Are there any financial experts on here who can explain why because I don't understand at all? The units have gone Ex-Dividend which would explain some of the fall but the company has 80% in Gold Mining Stocks. The units are valued in dollars but then so is gold!

If you want to "invest" in gold (I see it as money, not a commodity or investment) then you really need to own the physical stuff. You need to be able to hold it in your hand. Especially right now.

chrismac1

Gold shares in general have a much higher correlation with other shares than with the gold price, and for good reason. A gold share is a piece of paper, the underlying company may itself have high borrowings, whereas gold is a physical substance with no "promise to pay the bearer" issues. In the case of Blackrock you should have known this. When the Lehmann crisis hit in late 2008 the shares tumbled heavily, although the gold price in USD was holding steady. Gold has safe haven status, gold shares have none.

In my view the best vehicle for short term hedges or speculations in gold is the tax-free spread bet. As of 1736 GMT you can buy for 1740.6 and sell for 1740.1 (Rolling Gold in USD) which is a 0.03% spread. Find me another route into and out of gold that is so cheap!

qpop

http://www.fool.co.uk/news/investing/2011/10/26/what-now-for-investors-who-hold-no-gold.aspx?source=uhpsitima0000001

An interesting, fairly well tempered view on gold investing.

WhiteHorse

All this presupposes that the government will continue to allow private citizens to hold gold.

Some of us remember Harold Wilson.

mr_fishbulb

Jegersmart wrote: »

Buying gold is very much like buying a single company share in terms of outright risk. Gold could easily lose half its value in a very short period if money flows out into something else. I would stay clear or invest only a small part of your portfolio in gold. imho, dyor.

OP - read this advice from Jegersmart.

By the sounds of it you want to move your total cash in your ISA over to gold, and I'm assuming you don't have other investments as you are having trouble doing your own research (no offence meant there).

It's great that you are thinking of other assets apart from cash to grow your wealth, but you need to start thinking about how long you want to tie your money up, what your investing goal is, what your appetite for risk is, etc - all the investing basics.

Phill_Anderson

Ways to invest in gold:
Future Market – Investors enter the market through futures exchanges, where trading takes place in contracts to buy or sell commodity at a fixed price on a definite future date.

Spot Market – Large numbers of investors buy gold from big banks. Here gold are sold for cash and delivered immediately.

Bars and gold coins - Investors can buy gold in the form of bar or coin from metal traders. Payment can be done in small premium between 5 to 20 % which, depend on the size of the product.