A. Gold, first and foremost, is wealth insurance. You cannot approach it the way you approach stock or real estate investments. Timing is not the real issue. The first question you need to ask yourself is whether or not you believe you need to own gold. If you answer that question in the affirmative, there is no point in delaying your actual purchase, or waiting for a more favorable price that may or may not appear. Cost averaging can be a good strategy. The real goal is to diversify so that your overall wealth is not compromised by economic dangers and uncertainties like the kind generated by the 2008 financial crisis or the on-going sovereign debt crisis in Europe.
Caterpillar also has nice value for investors, which isn't often easy to see in speculative gold stocks. Shares trade at 15.5 times trailing earnings and it pays a 2.4% dividend yield at recent prices. Gold and mining isn't the only factor that will keep profits high, but that's the beauty of investing in a company that has multiple end markets to go with gold mining.
Depending on your budget, personal objectives and investment time horizon, you may consider a dollar cost averaging investment strategy. Dollar cost averaging is a conservative approach that involves dividing the total sum to be invested into equal amounts and investing those fixed amounts at regular intervals over time. This approach enables you to scale up or down with the market.
Many investors buying gold turn to gold bullion coins from sovereign mints. Gold coins are a popular choice because the weight and purity of the coins are backed by a central bank and sovereign. Moreover, gold coins are produced on an annual basis to meet consumer demand, so there’s rarely a shortage of gold coins available to those investors who want to purchase the precious metal in this form. The following are some of the most popular gold coins for sale:
Exchange-traded funds. If you don't particularly care about holding the gold you own but want direct exposure to the physical metal, then an exchange-traded fund like SPDR Gold Shares is probably the way to go. This fund directly purchases gold on behalf of its shareholders. You'll likely have to pay a commission to trade an ETF, and there will be a management fee (SPDR Gold Share's expense ratio is 0.40%), but you'll benefit from a liquid investment that invests directly in gold coins, bullion, and bars. That said, not all gold-related ETFs invest directly in gold, as I'll discuss below.
Although governments have decided it's easier to be off the gold standard than on it, that doesn't change the central issue that backs gold's intrinsic value and safe-haven status: There's only so much gold in the world. The gold that's above ground being used in some fashion is estimated to be around 190,000 metric tons. The amount of gold in the ground that can be economically mined today is notably less, at roughly 54,000 metric tons.
Goldcorp was once a king of the gold stocks and hasn’t done anything great lately. The firm got a reduction in costs and the production levels dropped to the bottom. The expected profits of the firm were held back. In the year 2016, the company turned around and got an idea of increasing the gold production and reserves by 20 percent. Obviously, there will be money required by the company for boosting production and cut off the overhead costs. With the rise in the gold prices, GG will have better prospects in growing and there will be better cash flowing for the company with the higher gold prices. The turnaround of the GG will be better in the upcoming future.
"Gold's return is solely based on the price going up. Thus when you sell gold you create a capital gain, that in most cases will be taxed at the more favorable capital gains tax rate," he says. "However, if one invests in gold in a tax-deferred account, the gains one receives will be taxed based on their income tax bracket, which is typically higher than their capital gains rate. So if an investor does want to own gold it should be done using taxable assets."
That's not to say that there aren't any good gold-related investments to consider, and the precious metal, along with companies heavily tied to it, can offer exposure to a different asset class. So we reached out to three regular Motley Fool contributors for an alternative perspective on some gold stocks worth watching right now, and they came back with Barrick Gold Corp (USA) (NYSE:ABX), mining equipment giant Caterpillar Inc. (NYSE:CAT), and gold streamer Royal Gold, Inc. (USA) (NASDAQ:RGLD).