A gold investment kit is an investment tool. It’s basically a menu of different investment options. It’s not enough that you diversify your investment portfolio between bonds, stocks and precious metals. Within these classes of diversified assets, you have to do further diversification. For example, find a million dollars and divide it into three parts because I wanted to spread around my risk. It doesn’t make sense for me to put one third that goes to stock into just one company. That would be suicide.
The same logic goes for the precious metal component of my diversified portfolio. It doesn’t make sense for me to put the precious metal section of my investment portfolio into just gold. I have to diversify within that precious metal portfolio, one part is gold. However, that gold part also needs to be diversified. This is a key part of gold investment kit. A proper gold investment kit not only plays up the diversification value of gold, but also has many diversification factors.
The strategy that you are really trying to pursue with a gold investment kit is diversification within a diversified portfolio. It’s not enough to just park a certain percentage of your money into gold. You have to look at different forms of gold based investments. Gold coins have been around for a long time.
Many people invest in gold coins. The reason why gold coins are popular because their value comes from two different sources. Not only do you get the actual value of the metal in the gold coins, but you also get the collector’s premium. The rarer the gold coins and the higher the demand for them, the more expensive they become over time.
However, in many cases, especially if you don’t really like looking up the value of gold coins and hassling with trying to get rid of gold coins of the collector’s market, it may be simpler to just invest in pure gold. A good gold investment kit would have pure gold options. You can buy pure gold in physical form or you can buy pure gold through other means.
Another aspect of gold investment kit is the issue of stock versus metal. Usually when people think about investing in gold, whether that be in a gold 401k or other, they automatically think about investing in gold coins or physical metal. The reality is that there are two other ways.
You can invest in exchange traded funds or you can invest in companies that pull gold out of the earth. We’re talking about gold mining stocks. The great about gold mining stocks is that their value tends to appreciate quite a bit when gold goes up in value. The downside to gold mining stocks is you’re playing the stock market. When you play in the stock market, you have to really zero-in on the right company. There are many gold mining stocks out there. This is not a slam dunk.
You could easily invest in a company that makes good money, but for some reason, the stock market doesn’t reward that company with a high valuation. When you invest in actual physical metal on the other hand, you only need to look at the daily spot price of gold and you know where your investment stands. This is why many people who are looking for a pure gold play would rather prefer pure physical gold.
There’s less guesswork, there’s less haggling and there’s less stress when trying to unload it in a collector’s market or trying to unload gold mining stock that is under appreciated.