Investing in Gold Bonds

Investing in physical precious metals has become extremely common due to economic uncertainty. Ever since the 2008 global financial crisis, investors turned to physical metals such as gold to secure themselves against rising inflation and protect their portfolios. Among other precious metals, gold is the first choice among investors as it is less volatile and is still very popular in demand. Gold is still seen as a measure of wealth and worth and is therefore the primary choice of all investors.

How to Invest in Gold Bonds

There are many ways of investing in gold including investing in gold bars, gold coins, buying physical gold, investing in gold ETFs, gold mining stock companies and gold bonds.

It is extremely rare to find bonds that pay back in physical gold but gold participation bonds are available and offer many benefits to investors. For starters, gold participation bonds offer investors a fixed interest rate, which is partially backed by the physical metal.

Gold bonds are sold by gold mines and other gold related businesses. The bond pays cash interest every quarter to investors. The interest paid is part of the initial principal amount made in the gold bond in the form of ETF shares. Moreover, in order to secure the bonds, the issuer pledges nearly 20% of all its future gold production.

Steps For Investing In Gold Bonds

Once you have made up your mind regarding investing in gold bonds, follow the steps below to get started:

  • The first step involved in investing in gold bonds is to open an account with a broker who deals with these types of securities. In order to find more about these brokers, you can search the internet. In fact, most people choose their broker from the internet so it is hundred percent safe to do so. However, do keep an open eye for the ranking of the broker you are choosing
  • Prior to investing, make sure that you have gathered all the necessary information including interest rates, repayment schedule, minimum investment that you have to make, identity of the associated ETF and the amount of money you have to pay as collateral
  • Whichever broker you choose, make sure you ask him for a prospectus and go through it carefully. For instance, if the price of gold falls, the total value you will get on your ETF will decline each quarter and vice versa.
  • You should also find out whether the bond you are getting repays a designated number of ETF shares or a fixed value of the given shares

Other ways you can get invested in gold is through purchasing jewelry, or even bullion or shares.

1/5 - (1 vote)

About 

Kevin Lee is a former tech advisor who cut his teeth in Silicon Valley. He now spends his time sharing his passion for investing in diamonds and jewelry. You can reach Kevin for any comments by using this form.