How to Buy Gold

How to Buy Gold

Since ancient times, gold has been a symbol of wealth and power. Its appearance and scarce supply have made it highly desirable by ancient civilizations and today, not much has changed in that regard. The mineral has a way of catching people’s fancy in a manner that cannot be easily explained, like the way a lot of people are fascinated by diamonds. 

Gold was valuable in ancient times and still is today. As a matter of fact, there was a time when most monetary systems were backed by the mineral. Now, while that may have changed, the mineral remains relevant to investors and the public since it is considered to be insurance against the possible crash of our current monetary system. 

For years, it has maintained a steady increase in value since its supply is limited. It is for this reason that many investors seeking to diversify their investment portfolio and spread risk buy gold in one form or the other. There are several ways one can buy this metal, but before we dive into those, let’s look at some of the things you should know about the mineral first. 

What You Should Know Before You Buy Gold

  • Gold stocks do not translate to physical gold. Yes, you read that right. The fact that you own gold stocks doesn’t mean you own it physically. The mineral can be purchased in two ways, which are on paper and physically. So, in clearer terms, gold on paper cannot be converted into its physical equivalent. 
  • Owning this metal physically doesn’t provide an added income stream. To earn from it, you’d have to own gold mutual funds or stocks that pay out dividends. 
  • All newly minted coins are 90% to 99% gold. 
  • Storing this metal can be expensive. Depositories charge annual fees and if you’d like to store the metal yourself, you’d still have to invest in a safe or vault, and insurance, considering the possibility of theft. 
  • Physical gold helps to protect or lock your purchasing power. 

How to Buy Gold

There are several ways that one can invest in this mineral. They include:

Bullion

Bullion refers to physical gold in bars or coins. Contrary to what some people think, an average investor will have no problem assessing and buying bullion. They can do so easily from a precious metals dealer like a brokerage, bank, or a local/ private dealer. 

Of the two physical forms in which the precious metal is sold, coins are the more popular option for a few reasons. One, compared to bars, coins can be liquidated much faster. Also, storage and transportation cost is considerably less since these coins are smaller and weigh significantly lessthan bars.  

Bars on the other hand are more favored when it comes to storing larger volumes of the metal since they can easily be stacked and arranged; coins would require bags that will take up a lot of space. While coins are typically easier to liquidate, some coins can be liquidated much faster than others. 

To get the best out of these coins, you should buy those that are most widely circulated. These include the Canadian Maple Leaf, the American Eagle, and the South African Krugerrand. Both bars and coins can be purchased online and from physical stores. But, irrespective of which type of bullion you choose to purchase, and the medium of purchase, ensure you’re doing so from a reputable dealer. Click here to learn more about the American Eagle.

Also, if you plan on storing your bars or coins in your home, do so in a secure vault or safe, and remember to insure them. It never hurts to be a little bit more cautious. 

Jewelry

If you feel more emotionally attached to this commodity, you may fancy having your investment in it in the form of jewelry. Jewelry allows you as an investor to not only secure your capital but also enjoy the pleasure of wearing it as a fashion piece. 

Gold alone can very much be used to make jewelry, however, it is more common to see it combined with other precious gems like silver, diamond, and so on. By doing so, the jewelry maker adds to the physical appeal of the piece while also increasing its overall value. 

If you plan on buying this shiny metal strictly as an investment, jewelry may not be the best option. This is because the other precious metals it has been made from, and the workmanship increases its price far above its meltdown value. So, you’ll basically be paying more for less gold. 

Another thing to point out with gold jewelry investment is the fact that investors can easily be ripped off. For instance, a new investor may payfor a 24-karat jewelry piece when in fact, the piece is only 18-karat. So, this is something you should confirm before releasing funds to the dealer. 

If you choose to invest in jewelry made from this shiny, yellow metal, you can do so knowing that you won’t have to spend any extra money on insurance. Yes, most homeowner insurance policies cover jewelry. Visit https://www.investopedia.com/insurance/homeowners-insurance-guide/ to learn more about homeowner insurance. 

Conclusion

If you feel storing gold with you in your home puts you and your family at risk, consider opening a precious metals individual retirement account (IRA). This account allows you to invest in physical gold without you risking your safety, or that of your family because the asset is stored securely in a depository that is insured. 

Bear in mind, however, that these depositories charge an annual fee that can be quite expensive. Prices vary, so, you may have to look around to see which depository’s price is more appealing to you.  

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