How Can I Invest In Gold Online

How Can I Invest In Gold Online

Are you asking yourself how can I invest in gold online ? Here are your answers: buy physical gold, futures contract, ETFs, mining stocks and gold options.

  1. Buy physical gold
  2. Buy gold futures contract 
  3. Buy gold ETF
  4. Buy gold mining stocks
  5. Buy gold call or put options

Let’s look at each option for gold investment in detail.

Buy Physical Gold

In order to buy physical gold you can simply walk into any gold dealer shop. Or buy physical gold online at authorised gold seller to buy physical gold and store it yourself.

Or you can send the money to a gold custodian and they will buy and store it for you.

This is how you can do if you have a Gold IRA account where you transfer money to a Gold IRA custodian company. 

Keep on reading to receive answers on how can i invest in gold online.

Trade Gold Forex

One way to invest in gold online is to trade gold forex.

Buy Gold Futures Contract

Another option is to buy gold futures contract at Chicago Mercantile Exchange (CME) in Chicago at Comex marketplace.

Gold Futures Contract Specifications
Source: CMEgroup

Gold futures contracts have a symbol GC.

Each month has its own code but not every month is a physical delivery month.

Physical delivery months are G (Feb), J (Apr), M (Jun), Q (Aug), V (Oct) and Z (Dec).

Also the year in which contract trade gets its own code like year 2020 has code 0.

Example: Gold futures Jun 2020 contract has code GCM0.

If you buy 1 GCM0 contract, then you stand for a physical delivery in Jun 2020 for 100 ounces of gold.

Gold futures are also a derivative instrument.

Most owners of gold futures contracts either rollover their contracts or accept to settle their gold futures contracts in money – not physical gold.

There are speculations that COMEX doesn’t have enough physical gold to settle all gold futures contracts. Hence they made it clear they can and mostly will try to settle gold futures contracts in cash.

Buy Gold ETF

Gold Exchange Traded Fund you can buy most famous gold ETF, which is GLD that tracks the price of spot gold.

If you don’t want to hold physical gold but want to be invested in gold, then investing in an gold ETF could be right for you.

There are of course certain differences in buying physical gold and investing in gold ETF.

Most gold ETFs most probably don’t have physical gold. So if you think you own physical gold by buying gold ETF, then maybe you are in for a shock.

There is also tax on capital gains you need to think about when investing in gold derivative instruments like ETFs.

Another way to maximize on gold potential is investing in gold miners ETFs.

Most known gold miner’s ETFs are GDX and GDXJ ( for junior mining companies).

Buy Gold Mining Stocks

If you like investing in gold mining stocks, then you have lots of choices about what gold company stocks you want to acquire.

Here things get more complicated. Because you need expertise in research and evaluation of the companies and their financial report.

There are available online services that do just that – trade and invest in stocks.

Why buy gold stocks vs just buy physical gold?

Answer is simple – leverage.

If price of spot gold goes up 10%, then price of a stock of a gold mining company could go up 200%

But leverage can also go against you. Maybe a gold company has a cash flow problem or a corrupt board.

Then even when the price of gold goes up, the stock of such a badly managed gold company can go down.

Buy Gold Call Or Put Options

Buying a gold call or put options is one of the most leveraged ways to capitalise on your gold investment if you are right that the price of gold is set to go higher or lower.

Leverage offered by some cfd brokers go as high as 500x.

With such high leverage it could happen that the price of gold could move only 2% but the value of a gold option or gold option’s premium could go up by 1,000%.

Beauty of trading gold options is also that you can make money by predicting the price of gold will crash. In this case you invest in gold put options.

What is a gold call option?

Option is a contract giving you a right but not the obligation to buy or sell the underlying asset. 

Call option in gold gives you the right to buy gold at a certain price (option’s strike price) for a certain amount of time.

Put option in gold gives you the right to sell gold at a certain price (option’s strike price) for a certain amount of time.

You can buy either gold ATM options or gold OTM options.

Here gold ATM stands for gold options that are at-the-money. 

This simply means that the ATM option’s strike price is near the current underlying asset price (gold spot or gold futures price).

OTM options means you would buy an option that has a strike price so much away from current underlying asset’s price, that probability for the underlying asset price to reach option’s strike price is low.

Final Thoughts

As you can see you have many ways to invest in gold.

You can also read our Forex Brokers Reviews category to read about forex brokers we tested.

Low risk gold investments like buy and hold physical gold yourself or through a gold custodian comes with a lower reward.

High risk investments in gold like buying gold options come with a high reward.

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