Most investors learn how to invest in gold by buying publicly traded shares of gold mining companies. There are many companies in the gold equity sector, including large-cap dividend-paying companies, mid-cap companies, and small-cap junior mining plays. An investor can also learn how to invest in gold through mutual funds, exchange-traded funds (ETFs), and the futures market, which requires some expertise with derivative financial instruments.
In today’s market, an investor or speculator can learn how to invest in gold with leveraged funds that seek, for example, to provide double the actual performance of the spot price of gold. This is a risky investment strategy and requires conviction on the part of the speculator.
What’s clear is that investing in gold is an inherently risky strategy due to the fact that the underlying commodity can be so volatile in terms of its price.
Typically, most professional investors recommend only a small portion of an overall portfolio be allocated to gold. Both the spot price of gold and other precious metals can change very quickly and institutional investors tend to be interested in gold on a non-consistent basis, which is something individual investors need to keep in mind at all times.