Investing in gold - Part 2

This week, we resume our look at gold as an investment option by outlining some possible ways to invest in it:

1. Gold bars: Bars come in metric sizes and are based directly on that day's gold price, plus a premium for manufacture and marketing. The smaller the bar, the bigger the premium.

2. Sovereigns: One popular way to own gold is by buying gold coins, with 22-carat gold sovereigns the favourite with many investors. Sovereigns dating from about 1887 and up to 1982 are currently the best bet.

3. Krugerrands: Another popular option is to buy South African Krugerrands. The smallest is a 0.1 oz coin.

4. Exchange-traded funds: Gold ETFs are not technically funds because they follow a single security. ETF gold securities are traded on various stock exchanges. They essentially track the gold price and can be traded daily. They are also regulated financial products. Visit www.exchangetradedgold.com or www.etfsecurities.com for more information.

5. Unit trusts and investment trusts: These are few and far between, the most popular being BlackRock Merrill Lynch Gold & General, which invests in the shares of gold-mining companies as well as other commodity businesses. Advisers reckon general commodity funds could also do the job for private investors as they dabble in gold-related stocks - JPM Natural Resources and ACDS Australia Natural Resources remain popular. Gold mining equities tend to be more volatile than the gold price.

6. Gold accounts: Gold-bullion banks offer two types of gold account - allocated and unallocated. An allocated account is effectively like keeping gold in a safety-deposit box and is the most secure form of investment in physical gold. The gold is stored in a vault owned and managed by a recognised bullion dealer or depository.

7. Gold shares: You can, of course, buy individual shares of companies that either trade or mine gold.

justin.robinson@cavehill.uwi.edu