Of all the precious metals, gold is the most popular as an investment. Investors generally buy gold as a way of diversifying risk, especially through the use of futures contracts and derivatives. The gold market is subject to speculation and volatility as are other markets. Compared to other precious metals used for investment, gold has been the most effective safe haven across a number of countries.

Investment vehicles

Bars: The most traditional way of investing in gold is by buying bullion gold bars. Bars generally carry lower price premiums than gold bullion coins. However larger bars carry an increased risk of forgery due to their less stringent parameters for appearance.

Coins: Gold coins are a common way of owning gold. Bullion coins are priced according to their fine weight, plus a small premium based on supply and demand. The sizes of bullion coins range from 0.1 to 2 troy ounces (3.1 to 62.2 g), with the 1 troy ounce (31 g) size being most popular and readily available.

Gold rounds: Gold rounds look like gold coins, but they have no currency value. They range in similar sizes as gold coins, including 0.05 troy ounces (1.6 g), 1 troy ounce (31 g), and larger. Unlike gold coins, gold rounds commonly have no additional metals added to them for durability purposes and do not have to be made by a government mint, which allows the gold rounds to have a lower overhead price as compared to gold coins. On the other hand, gold rounds are normally not as collectible as gold coins.

Exchange-traded products: Gold exchange-traded products may include exchange-traded funds (ETFs), exchange-traded notes (ETNs), and closed-end funds (CEFs), which are traded like shares on the major stock exchanges.

Gold exchange-traded products (ETPs) represent an easy way to gain exposure to the gold price, without the inconvenience of storing physical bars.

Exchange-traded funds, or ETFs, are investment companies that are legally classified as open-end companies or unit investment trusts (UITs), but that differ from traditional open-end companies and UITs.

Certificates: Gold certificates allow gold investors to avoid the risks and costs associated with the transfer and storage of physical bullion by taking on a different set of risks and costs associated with the certificate itself.

Banks may issue gold certificates for gold that is allocated (fully reserved) or unallocated (pooled). Unallocated gold certificates are a form of fractional reserve banking and do not guarantee an equal exchange for metal in the event of a run on the issuing bank's gold on deposit. Allocated gold certificates should be correlated with specific numbered bars, although it is difficult to determine whether a bank is improperly allocating a single bar to more than one party.

Derivatives, CFDs and spread betting: Derivatives, such as gold forwards, futures and options, currently trade on various exchanges around the world and over-the-counter (OTC) directly in the private market. In the U.S., gold futures are primarily traded on the New York Commodities Exchange (COMEX) and Euronext.liffe. In India, gold futures are traded on the National Commodity and Derivatives Exchange (NCDEX) and Multi Commodity Exchange (MCX).

Why Should You Invest in Gold

• Investing in gold is worthwhile because it is an inflation-beating investment. Over time, the return on gold investment has been in line with the rate of inflation.
• Gold has an inverse relation with equity investments. For example, if the equity markets start going down, gold would perform well. Considering gold as an investment option in your investment portfolio will be a buffer to the overall volatility of your portfolio.