Due to its inherent and fairly consistent value, gold bullion is generally considered a wise investment, and it’s one you can make in many different ways. Some investors prefer to buy gold bars or coins directly, while others prefer a more indirect approach. This brings us to the topic of stocks related to gold bullion. The precious metals experts from First National Bullion, the best place to buy gold in San Diego, explain how to go about buying gold bullion stocks.
Deciding How You Prefer to Invest
Start by exploring your options with stocks related to gold bullion and similar options. One possibility is to buy stocks issued by a company that mines physical gold and processes it. Similar options include:
• Bullion exchange-traded funds (ETFs) – Bullion ETFs are based on physical gold prices, but you don’t have to physically buy, store, or sell the gold to make a profit.
• Gold funds – With this option, you’re either directly or indirectly investing in gold reserves.
Buying Gold Stocks Issued by a Mining Company
The most common way to buy stocks related to gold bullion is to purchase stocks issued by a mining company, which are largely influenced by the value of gold at any given moment. However, you get the added perk of being able to make a recurring profit based on how a particular mining company is performing. According to Thenest.com, solidly performing and reputable mining companies have historically been more profitable for investors than what’s common with physical gold purchased independently. If you’re not an employee of a gold mining company, there are two ways you can make a more direct stock purchase:
• Direct Stock Purchasing Program (DSPP) – In this case, you’re purchasing the stock either directly from the gold mining company or through the company’s transfer agent.
• Dividend Reinvestment Plan (DRIP) – With this setup, the dividend reinvestment process is automatic. You also won’t have to worry about commissions or brokerage fees.
Gold bullion–based stocks issued by a mining company can also be purchased through an online broker. In this case, there are brokerage fees, but it’s also a more convenient way to get started if you’re a newer investor. You can also purchase mining company stocks from a registered investment representative. This option also gives you access to advice specific to your budget and investment goals.
If you buy stocks from an established gold mining company, you’ll earn dividends. However, if you go with a newer company that isn’t yet well established (referred to as a junior mining company), there are no dividends. Instead, these companies use their profits to fund growth.
Buying Mutual Funds & ETFs
Some investors prefer to mix things up investment-wise and purchase mutual funds and bullion ETFs along with stocks from mining companies. With any of these options, there’s still some reliance on physical gold, although there are differences in risks and potential profits. ETFs are purchased via a stock exchange, while mutual funds are typically purchased from a financial institution.
If you decide to purchase physical gold, make sure to work with experienced trustworthy professionals. When they’re looking to buy San Diego gold and bullion, investors and collectors can trust the reputable dealers at First National Bullion. We’re a boutique precious metals firm with highly experienced professionals. If you’re looking to add precious metals to your collection, call us today at (858) 304-7580.
The statements made in this blog are opinions, and past performance is not indicative of future returns. Precious metals, like all investments, carry risk. Precious metals and coins may appreciate, depreciate, or stay the same in cash value depending on a variety of factors. First National Bullion does not guarantee, and its website and employees make no representation, that any metals for sale will appreciate sufficiently to earn the customers a profit. The decision to buy, sell, or borrow precious metals and which precious metals to purchase, borrow, or sell are made at the customer’s sole discretion.