To answer this question, we need to explore the different forms of gold available as an investment vehicle. Gold in its crude form does not look appealing to investors and I believe no one will be keen to go to gold mines to dig for gold as a pastime. I will only cover the different types of gold investment and you can decide for yourself the form to go into after considering the risks and rewards of each form.

Physical gold is the basic form of gold investment where investors are known to hoard them up as a defence against inflation. You can invest in physical gold in the form of bars and coins. Bars include the Credit Suisse bars which are well-known all over the world. However, such bars are known to be selling above the prevailing gold price and may not be a wise choice in the long run as they can be hard to dispose off when you really need the money. My recommendation will be to go for bullion coins like the American Eagle or the Canadian Maple Leaf as they usually trade closely to the gold price. Many people will feel that the hoarding of these coins are an hassle and we should go for gold accounts set up by banks instead. I will like to remind all that history has showed us that in times of turmoil ie the Vietnam War, only physical gold bought people a safe ticket out of the war zone. For the sake of your family's future, I will advise keeping ten percent of your networth in physical gold.

Another way to invest in gold will be using the gold accounts of banks. The units in the gold accounts in the banks are backed up by physical gold held in the banks and the banks will give the assurance that you can convert your gold back to cash anytime. The only disadvantage is that the fees for such services can be as high as 1 percent each year and over the long run, you may be making your bank richer than you. In another worst case scenario that the bank collapses, it will definitely be a challenge getting your gold back.

For the passive investors, you may like to consider buying into gold funds but do note that these funds usually invest in companies that are involved in gold production. This means that you are also investing in the management of these companies placing faith that they are upright. Gold funds offers diversification to most investors and is a lazy way to gain exposure to different gold companies all over the world. Of course, you will have to factor in the management fees as well as the possibilities that the under performance of the fund managers.

Last but not least, Gold ETF(exchange traded fund) offers investors a easy way to invest in gold as the price of the ETF unit will track the prevailing gold price closely. The transparency offers investors more confidently and there is really little skill involved here. The low charges make it an additional bonus as you hold gold in the ETF. No storage risks and everything looks great. Is it really so? Again, I will like to highlight on one risk known as liquidity risk that in the event of a world crisis, can you dispose your unit at a fair price if you need the money? In a gold fund, you can be sure that the fund manager will find the cash to redeem your units but an ETF functions in a free market where there are willing buyers and sellers. The key question is can you find a buyer to take over your unit at a fair price then?

I hope that this short article has given you an overview on the different ways to invest in gold. Do your own research and good luck building your own portfolio of gold eventually.