Investment News: Money Morning

There are many ways to invest in gold. You can make 500% in gold stocks or 50% in gold bullion coins or bars. You can even make a 1000% in futures or options… or you can lose it all.

But one thing is for sure: gold is skyrocketing in value - a result of increasing demand from Asia, worldwide inflation and the tanking U.S. dollar. And that demand is causing gold’s price to soar.

Gold has gained 1353% in the past five years. Along with those gains came new gold investors. And as the number of gold investors increased, so did the ways to invest in the yellow metal - some as safe as gold, some riskier.

Let’s briefly outline 10 ways to invest in gold - their risks and rewards - beginning with the riskiest and ending with the safest.

Futures and Options

Yes, you can make a 1000% by being leveraged in a gold bull market. However, with this huge leverage in futures you can lose all the money and much more. And in options, you can lose all the money you put up. These are the two riskiest ways to own gold and are not recommended for most investors. However, if interested contact Bob Meier at 800-227-3517.    

Junior Mining Stocks

This is not a pure investment in gold but an investment in the management of an exploration company. I understand that only 1 in 10,000 exploration companies will find a mine and bring it into production. Yes, you can make 100% but what do you think your chances are?

Senior Mining Stocks

I am finally getting more comfortable with the risk of blue-chip stocks. Senior mining companies are cash-generating businesses. They don’t explore, but rather buy the juniors that have made a discovery. They include companies like Newmont Mining (NEM) and Barrick Gold (ABX). 

The best stockbroker I know for junior and senior gold mining stocks is Jerry Needelman (800-456-1010), who has been in the business for 30 years. 0

Mutual Funds

This is probably the wisest and least risky way to buy gold stocks. Friends like Frank Holmes at U.S. Global Funds (www.usfunds.com) know how to find the winners. The Oxford Club recommends the American Century Global Gold Fund (BGEIX) in its Gone Fishin’ Portfolio. You can learn about the Gone Fishin’ Portfolio at www.oxfordclub.com.

Bullion Jewelry

Gold investors in India, Vietnam and Dubai wear their wealth by purchasing gold jewelry. Typically, in the Far East jewelry has a small mark-up unlike what one can find in the West. However, there are exceptions and one of the exceptions is to contact First Collectors Guild, which sells jewelry determined by intrinsic value (www.firstcollectorsguild.com). 

Numismatic Coins

Some rare gold coins grading Mint State 63 or higher have gone up 70% or more. These coins should be "slabbed" by recognized grading services (PCGS or NGC). These coins are volatile. For example, some numismatic coins peaked in 1989, dropped in value 85% by 2001, and have spiked back another 70% in 2007.

Bullion Coins and Bars

You can buy and hold gold bullion coins and bars. The more popular bullion coins are one-ounce gold American Buffalo coins, the Canadian Maple Leaf and the Australian Kangaroo Nugget. The one-ounce gold bars include Johnson Matthey and Credit Suisse. These bullion coins and bars don’t have extraordinary upside or downside but simply move up and down with the price of gold.

For your safety, I suggest you stay with the Oxford Club’s recommended coins dealers for both numismatic or bullion coins (see their website, www.oxfordclub.com).

Exchange Traded Funds (ETFs)

A gold ETF enables investors to purchase and trade shares of a trust whose primary asset is gold held by various custodians and sub-custodians. Because a share of an ETF represents only a promise to pay as opposed to actual ownership of metal, it may be less appealing to individuals seeking the safety and utility of tangible bullion in various situations (See your local stock broker).

GoldMoney

GoldMoney A digital gold program offering to electronically buy and sell gold at market price with storage in either London or Zurich. Created by James Turk, GoldMoney has become very successful. For more information, simply go to www.goldmoney.com.

The Perth Mint Certificate Program (PMCP)

There may not be one best way to buy gold but the safest way to buy gold is through this certificate program. Not only is it cost effective, it is also the safest because it’s the only certificate program in the world with a government guarantee. The AAA guarantee is from the Government of Western Australia. For information go to: www.assetstrategies.com.

I must add that I do have a bias for PMCP. My business partner, Glen Kirsch and I helped create this program for the Perth Mint 10 years ago.

Michael Checkan is President of Asset Strategies International, Inc. based in Rockville, Maryland. He is available to answer your questions about investing in precious metals and foreign currencies. Please contact Michael by telephone, 301-881-8600 or toll free (Canada/U.S.) 800-831-0007; by fax 301-881-1936; by email assetsi@assetstrategies.com or via his web site www.assetstrategies.com.

Profits Are Up 1,056.2% for This Wisconsin Company

Commodities are on a tear - and so is mining equipment. This "pick-and-shovel" company has already sold out two-thirds of its equipment for 2008. Australia, Canada and China are battling for orders. And the Street hasn’t figured it out yet. All the details are in our Power Plays Report.