- There are three main ways for foreign investors to invest in the American gold market: Gold Futures, Physical Gold, and Exchange-Traded Funds (ETFs).
- Gold Futures involve betting on the future price of gold and can be a potentially rewarding but complex process.
- Owning Physical Gold allows investors to purchase gold outright and have it delivered to them, but it requires a US bank account and may have high transportation and insurance costs.
- Trading in ETFs, such as SPDR, offers an easier way to invest in US gold, as it functions similar to investing in stocks, but investors do not physically possess the gold.
As a debt-related site, we’ve answered a lot of questions about how to stay out of debt, how to manage debt, and overall, how to invest. Many of our pieces have covered the Australian and New Zealander markets, especially crypto.
But much in the news of late has been gold, and in this piece I’ll cover the three best ways a foreign investor can get into the American gold market: Futures, Physical Gold, and Exchange-Traded-Funds.
If you’re heavy into day-trading, or if you have someone you trust managing your assets, then gold futures may be a great way for you to tap into the volatile and profitable American gold market. Governed by a body called COMEX (Commodities Exchange, Inc.), a division of the New York Mercantile Exchange (NYMEX), futures buying and selling is a complex but potentially rewarding process.
If you’re already familiar with futures trading, then read on. If you’re not, though, you can think of futures as “betting” on the price of a commodity at a certain date in the future.
In future’s investing, you either agree to take possession of a certain amount of gold, at a certain price, on a certain day, or you agree to relinquish it at said price and date. For instance, you could purchase a future of gold that promises you will deliver 100 ounces of gold to the NYMEX vaults. If you go long at the future (buy) at $600 an ounce, and before that time comes you short (sell) at $620 an ounce, you make $2,000 (the price difference multiplied by the standard 100 ounce investment).
In order to participate in the US gold futures market, you must have a valid account set up with COMEX. To do so, contact your financial advisor, or find an American company who can assist you.
Owning Physical Gold
Another option for getting into the American gold market is to simply purchase the gold outright, and have it delivered to you. This can be tricky for any foreign investor, let alone ones like us so far away from American markets.
Luckily, I’ve found a list of the best gold companies that help Americans with their individual retirement accounts, and they can offer assistance to buyers of all walks of life.
By contacting one of these companies, you can begin the process of opening an American checking account, transferring funds, and purchasing the physical gold. Most of the transport of the gold will be within the US, but once the gold is purchased, it will be yours.
Trading in ETFs
An exchange-traded-fund, or ETF, is a process that actually began right here in Australia with a company called Gold Bullion Securities, in 2003. The major gold ETF in America is called SPDR. (Pronounced “spider,” it comes from a defunct acronym, Standard & Poor's Depositary Receipts.)
Investing in SPDR works very similarly to investing in any other stock. If you have an approved account set up to trade in American stocks, you can invest in SPDR just as you would any other asset.
With many gold ETFs, your funds are actually buying your stock in a basket of assets that are derivative of the gold market. What sets SPDR apart, however, is that your funds go directly into investing in physical gold, while you never have to possess it, yourself.
Getting involved in any foreign market presents hurdles. Once you move beyond the conversion of assets (AUD to USD), you will still in many cases have to find a broker. The benefits, however, often outweigh the risks. In the case of gold, it’s humankind’s oldest money, and for good reason. It keeps its value, and never goes out of style.
If you’re interested in learning more about the US gold market, the five companies I found are the very best at what they do, and make a great first place to start if you have any questions.
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