How To Buy Gold – Forbes Consultants

If you want to buy gold, you don’t have to convert your walk-in closet into a tiny Fort Knox. In fact, the only storage you might need is an investment account.

How to Buy Physical Gold

gold bar

Gold bars – more commonly known as gold bars – are a popular choice for people looking to buy gold. Gold bars are usually sold in grams or ounces, and the purity, manufacturer, and weight should be stamped on the face of the bar.

Purity is very important when buying gold: Investment grade gold bars must be at least 99.5% pure gold. This is especially important if you want to keep bars in a gold IRA. Less pure gold, unless it is a specially pre-approved gold coin, cannot be held in an IRA.

You can buy gold bars from traders, individuals, or online on sites like JMBulion, the American Precious Metals Exchange (APMEX), or SD Bullion. And keep in mind that you may be burdened with delivery charges – plus insurance – to keep your gold bar safe in transit.

Gold coins

Gold coins like the American Gold Eagle or Canadian Maple Leaf are popular collector’s items. This collector aspect means that you are paying a premium over what you would pay for the same amount of gold in bars. In addition, coins typically have a lower gold content than gold bars. For example, a one ounce American Eagle coin is only 91.67% gold; the rest is silver and copper. (However, American Eagle coins can still be held in gold IRAs.)

You can buy gold coins through dealers, pawn shops and individual sellers you trust. If you want to buy your gold coins online, contact a dealer who is in the US Mint database. Whether you buy your gold coins in person or online, you don’t want to waste money on counterfeits or gold that is less pure than you are led to believe.

Jewellery

Jewelry, especially antique pieces that are likely to have a higher gold content, can provide another option for buying gold. But keep in mind that like gold coins, you will likely pay extra for the amount of gold you actually receive. (Depending on the manufacturer, it can be between 20% and 300%.)

Also, remember that all that glitters is not gold. Manufacturers use alloys to combine gold with other metals to make their pieces more durable or to match their color. The gold quality (measured in carats) correlates with the purity.

As with coins, you should be extra careful when purchasing gold jewelry. Make sure the person you are buying your jewelry from is reputable. You can start with jewelers who are members of the Jewelers of America and have signed a code of conduct that requires them to be honest and open about the nature of their pieces.

You should make sure you have as much documentation as possible so that you can confirm the quality of your gold when you resell it.

Factors to Consider When Buying Physical Gold

When deciding to buy physical gold, there are a few things to keep in mind:

• Storage: Physical gold requires a secure storage location. While you can safely keep your gold at home, many investors prefer a custodian. Before you buy, do some research on safe storage options for your gold and remember that safe storage adds an extra cost to your gold investment.
• Insurance: If you choose to store your gold at home, you should insure your gold to protect yourself from theft or natural disasters. This can add to the cost of your home or tenant insurance. And even if you don’t keep your gold at home, you should check your storage provider’s insurance policy to see how it will protect your investment.
• Manufacturer: Since you are making an investment, make sure you are buying from reputable sources that will help keep the value of your purchase increasing over time. When buying gold, look out for reputable producers like Credit Suisse, the Perth Mint, and the Royal Canadian Mint.
• Purity: The gold content in the coin, bar or piece of jewelry has a major impact on its value and value as an investment vehicle. Make sure that any gold you buy as an investment is purity enough to last. That means you are likely aiming for gold items that are at least 91%, if not 99% pure.

Other ways to buy gold

If this all sounds like too much of a hassle, but you still want a little bling in your investment portfolio, consider investing in stocks, mutual funds, and ETFs related to the gold industry.

Gold mine stocks

Instead of investing in physical gold, you can instead buy stocks in companies that mine and refine gold. Leading gold miners include Barrick Gold (GOLD) and Newmont Mining Corporation (NMC).

While the prices of your stocks may not exactly match the performance of the physical price of gold, they will likely be correlated. This allows you to get exposure to gold as an investment without the risk or headache of dealing with physical gold.

Gold mutual funds and ETFs

Instead of investing in a single company tied to gold, invest in a basket of gold-related securities through gold mutual funds or ETFs. Gold funds can track the price of gold, leverage holdings from multiple gold mines and refineries, or provide exposure to gold futures and options.

The top gold mutual funds and ETFs include:

• iShares Gold Trust (IAU)
• Invesco DB Gold Fund (DGL)
• Franklin Gold and Precious Metals Fund (FKRCX)

Futures and options

For more risk-taking investors, futures and options can be attractive. (If none of these words mean anything to you already, you should probably avoid these gold investments for now as they are highly speculative.)

With gold futures, you commit to buying or selling gold at a certain price in the future. Under a gold options contract, you have an agreement with the option to buy or sell gold when it reaches a certain price at a certain point in time.

To successfully buy gold futures or options, you need a broker account and extensive industry knowledge. You need to closely monitor your account and the price of gold to make sure you don’t miss the opportunity to exercise your options. You can also end up enlarging any losses you suffer as a future, and options generally involve taking leverage or using money borrowed to purchase securities.

Is Gold a Good Investment?

If you are looking to get rich with a modern gold rush, you are probably in the wrong place. Over the past five years, the price of gold has risen about 36%, while the S&P 500 has risen 104% over the same period. So why all the hype?

Because some see gold as a safe haven from inflation and extreme market slumps. For example, during the 2007-2008 bear market, the stock market plunged 33% overall. Gold meanwhile only lost 2%.

However, the price of gold can be very volatile, which means that gold is not a completely (or even primarily) safe investment. In fact, you can create a well-diversified investment portfolio without gold.

However, if you want some of that golden sheen in your investment account, you should aim for it to take up only a small percentage of your investment dollars.