Money and Metals

This Bankrate.com piece looks at the best ways to buy gold. "The conundrum for investors is that gold can be owned in different forms. Some are riskier than others. Liquidity varies, as do the costs associated with each form of the asset."

"Dealers sell gold bullion bars in various weights from 1 ounce to 100 ounces or larger. You can also buy gold coins such as the American Eagle through dealers, brokerages and some banks. The U.S. Mint has a list of authorized dealers. You'll pay a commission or premium, and most dealers have purchase minimums. Be sure to study the differences between bullion gold coins, which are valued according to the market price for an ounce of gold, versus coins that have a collector's value."

"You can own a chunk of gold by investing in exchange-traded funds that make buying and selling gold bullion as easy as buying and selling stocks. The share price of streetTRACKS Gold Shares (GLD, news, msgs) roughly tracks the price of gold and represents an investment in gold bullion. In effect you get to own gold without the hassle of storing and insuring. 'With GLD, each share is priced at about one-tenth the price of gold bullion. If gold goes to $600 an ounce, then the price of a share should be about $60,' says Martin Weiss."

"The objective of iShares COMEX Gold Trust (IAU) is the same but, so far, is much less widely traded than GLD. There are fees associated with exchange-traded funds, but they're usually low. In addition, expect to pay a commission to your broker for each trade."

"When it comes to gold stocks you're investing in a mining company. Gold mining stocks can be more volatile than the exchange-traded funds. 'You're buying a company in the gold business, and indirectly you get a stake in their gold reserves and their gold business. It's an indirect method of betting on gold.' Weiss says. 'Mining stocks reflect the profits of the company. If it costs the company $250 an ounce to dig up gold, pay employees, gas and the like, and gold is selling at $375, their profit is $125,' he adds. 'If the price of gold rises to $500 their profits have doubled, so the stock is more volatile. But it works the other way, too. A drop in the price of gold could flip flop a company from one that's profitable to one that's bleeding.'"

"Advisers often tell do-it-yourself investors that the safest way to play the stock market is to buy mutual funds. That advice probably holds up well when looking for a foothold in gold, too. They're not always pure plays on gold, but that helps lessen volatility, says Mark Skousen 'I like the mutual funds that include a lot of different commodities including gas and oil such as U.S. Global Resources Fund (PSPFX). There are several out there that give you a little more investing in other areas, rather than just precious metals,' (Skousen said). Two other funds that were recommended in the course of researching this article are Prudent Global Income (PSAFX) and Vanguard Precious Metals and Mining (VGPMX). There are scores of other mutual funds that seek to give investors a stake in gold."

"Buy gold jewelry because you like it, not as an investment. You pay a premium for jewelry, in part, because of the design and craftsmanship. If you buy 14 karat gold, it's less pure than investment grade. When you sell you'll need to consider the purity of the gold and, more than likely, it will have to be refined to bring it up to investment grade."