With different regions of the world experiencing one economic situation or the other, more and more people are beginning to look for safer ways of investing their hard earned funds. One way that a lot of people are turning to is investment in precious metals – gold, silver, palladium etc.
If you fall under this category of persons, then you will most certainly have come in contact with companies, self-styled as Gold investment companies. More of these types of companies are being established, prompting the need for the investing public to be properly educated about what they are and what they do.
This article will therefore focus on discussing the very basics of such companies and their operations. This will help you understand how to go about making sifting through the many gold investment companies currently available, to know the right one to work with.
Understanding the Basics
Let’s start looking at the very basics. This will include defining what these companies are, the services to offer and why you may need their services. Let’s right into it.
What are Gold Investment Companies?
Gold investment companies are simply entities that help you invest in Gold. In many cases, their scope of operation covers all precious metals that are accepted as investment vehicles. Given that Gold is not something you can just buy and sell on the street, you need a licensed agent to help you with this transaction.
So to put it simply, this company will help you handle all aspects of your transactions in Gold and possibly other precious metals. They act much the same way as a stock broker or stock broking platform with regards to the purchase of company stocks.
What Services Do they Offer?
As a continuation of the definition from above, we will now delve into the services that they offer their clients. There may be a few variations, but we will focus on the core services that any such company is expected to offer.
Trading in Gold
This can be regarded as the core service that they render. It involves the buying and selling of gold on behalf of their investors. This can be done in different ways.
Some have digital platforms where investors can carry out their transactions in real-time and based on real data. They may even offer expert opinions to help their investors make the right decision. They will basically help you buy and sell this precious metal with on the best terms possible.
Storage and Custodianship
Some investors want to own physical bullions but do not want to have to store them. For customers like these, the company will usually offer a storage or custodian service. That is, they will help you hold the physical bullion or coins in storage.
For companies that offer this service, they usually own state-of-the-art secured vaults where these precious metals are securely stored for their customers. Needless to say, customers will want to be assured of the utmost security before they can confidently store their precious investments with any organization.
Gold Investment Opportunities
Aside from the two services mentioned above, you can also get gold-based investment products from many of these organizations. Some of these include:
- Gold Mutual Funds – Just as with your regular mutual fund investments, the company can get funds from several investors and then invest them in different gold-based investment vehicles. This allows individual investors to take part in high-capacity investments that their individual funds would not have been able to handle. Returns are then shared across board based on individual investments.
- Gold ETFs – These are Exchange Traded Funds that focus on tracking the price of gold in the market. These ETFs, which are traded on your regular stock exchange, offer an opportunity to invest in the gold market without the need for physical ownership or a bullion or coins.
- Gold Certificates – This is a paper proof of your ownership of a given amount of gold. Just as with owning stock in a company, you may never take physical ownership of this piece of precious metal, but the certificate confers on you its full value.
Understanding How these Companies Operate
Is it really important to have a basic knowledge of how these companies operate? The short answer to this is yes! If you are in any way interest in this type of investment, then you need to know how to find the best gold investment company to work with. One of the major ways through which you can determine the right company to work with is having an idea of how they are supposed to operate.
With this knowledge, you can focus only on those entities that meet the basic operational requirement. If you have no idea of what to expect, then you can be easily deceived into putting your funds into a scam venture or some other unreliable investment scheme.
Below is a summary of the most important operational procedure to expect:
Market Analysis and Research
The commodities market can be dynamic, with different moving parts impacting the price of the product. One of the most important processes that companies such as these have in place is constant market monitoring and analysis. This enables them have up-to-date data with which they can provide sound advisory services to their customers.
Some of the factors that are constantly monitored include:
- Availability – This deals with the supply and demand of the commodity. Remember that when a product has high demand but low supply, the price goes up. The reverse is also true, so the decision to sell or buy can be affected by this factor.
- The Economy – Inflation, GDP, interest rates, among other things, are also factors that are considered with respect to how they will affect the price of the commodity. Of course, when people more disposable funds, they are more likely to want to make additional investments than when the funds are not available.
- Geopolitical Realities – Political stability or a lack of it is also a major factor that is considered when making any investment decision.
By closely monitoring the factors mentioned above and other indicators not discussed, these companies increase the investor’s chances of having a profitable investment. Learn more here.
Personalized Investment Products
No investment expert worth its salt will lump all its investors into one group. Each investor is supposed to have a personalized plan that takes into consideration a number of factors. Some of these include:
- Financial Goals – This tells the company what you want to achieve and the period during which you want to have achieved it. With this goal clearly stated, the advisor can begin to put together an investment plan that can meet this goal.
- Risk Tolerance – Having defined the customer’s financial goals, the next thing will be to understand their risk tolerance. This refers to how much risk they are willing to take. Since higher risk investments usually yield higher returns, a balance between the risk tolerance and financial goal will therefore have to be struck.
- Diversification – This is a third factor that will have to come into play to both manage the customer’s risk tolerance and also increase the chances of meeting the financial goals. In some cases, the customer’s personal beliefs and preferences may come into play.
A combination of these and more factors will be used to design an investment plan that best suits a customer.
Use of Technology
Times have so changed that there’s hardly any aspect of our lives that cannot be improved with the use of technology. Investment companies of today have loads of such tools at their disposal. From real-time access to information to precise data analysis, predictive modeling, and algorithm-driven investment, the effective use of these tools serve to increase the profitability of their investment products.
Conclusion
We’ve taken some time to discuss gold investment companies and what they do. With the information you’ve just received, you are now in a better position to understand why you need one and also how to ensure you invest with one that can assure you of the long-term growth of your investment.
