How to Buy Gold

How to Buy Gold

Stockpiling gold has been a favorite pastime of the wealthy
throughout history, and the gleam of gold is still
irresistible to many investors today, with gold being the
most popular investment out of all the precious metals.[1]
Some people like the fact that gold is a tangible commodity
that will retain its value even if paper currency loses its
value,[2] while other investors are attracted to the
liquidity of gold. For many, gold is a way of riding through
the rise and dips inherent in economies, with gold serving
as the "only real hedge against the massive financial
excesses that still prevail in the western world".[3] This
article offers several ways to add gold to your investment
portfolio.

!! Steps !!

Decide why you're interested in investing in gold. Gold isn't cheap
and keeping it on your premises does bring certain security
concerns with it. If you're already in financial risk, gold
investment probably isn't for you until you've cleared some of your
existing debts. But even if you have some spare investment funds,
it's important to decide why you're keen to invest in gold, so that
you know it's the right thing for you to proceed with. Common
reasons for investing in gold include:[4]

* Gold is always in high demand. It's a tangible product that can
always be passed on without concerns for its desirability in the
future. Contrast this durability with antiques and collectibles,
which are subject to the whims of every generation's interests.

* Owning gold can protect you from a decline in currencies or from
inflation. Countries often start investing in gold when the
economic times start to nosedive, and the more debt-laden an
economy, the higher the price of gold per ounce will likely
head.[5]

* Gold can be another "string to your bow" when you seek to
diversify your investment portfolio. Diversification is considered
to be the best reason for owning gold according to financial
experts.[6] This ensures sound financial management, of not
putting all your investment eggs into one basket.

* Gold is a sound means for protecting wealth over a long period of
time (provided you store it securely).

* During a period of civil instability, gold is a way to protect
assets - portable, easy to hide, it can help you to hang onto
something when everything else is lost.

!! Buy Gold Bullion !!

American Gold Eagle Decide what type of investment-grade gold
bullion you want to buy. The choices are either gold coins, gold
bars, or gold jewelery.[7]

* Historic (pre-1933) gold coins tend to retain the best values, as
these have numismatic value in addition to their gold content.
Examples are the British sovereign, British guinea, Spanish
escudo, French 20- and 40- francs, Swiss 20 francs, and American
gold Eagles ($10 face value), Half-Eagles ($5 face value), Double
Eagles ($20 face value). These generally contain 90% gold content;
the British sovereign is a notable exception with 91.66% gold
content, or 22-karat.

* The American Eagle Gold Coin is made from 22-karat gold mined in
America. Other gold bullion coins include the Canadian Maple Leaf,
the Australian Kangaroo, the South African Krugerrand (which
sparked the entire gold coin for investment industry)[8] and the
24-karat Austrian Philharmonic.

* Gold is also sold in bars that are usually 99.5 to 99.99 percent
fine. The popular gold refineries include PAMP, Credit Suisse,
Johnson Matthey and Metalor, which will be stamped on the bar.

The problem with buying gold jewelery as an investment is that you
pay a premium for craftmanship and desirability of the design. By
all means consider this if you love the aspect of collecting
jewelery because it's beautiful and love that it is gold. Any piece
of jewelery 14 karat or less will be below investment quality and
any resale for the sake of investing will be impacted by the need
to refine the gold.[9] On the other hand, it is possible to pick up
antique or vintage gold for very little at estate and similar
auctions if the worth is not realized, or people simply don't bid
much. Older pieces carry more value due to their less mass-produced
craftsmanship too, so this can be a lucrative and enjoyable way to
collect gold.[10] If you do this, be sure to know how to find the
carat, and how to locate blemishes, etc., that can impact the
value.

Choose a weight to buy. Clearly, the greater the weight, the
greater the cost and you'll also need to give consideration to
storage safety.

* The American Eagle Gold Coin and the other coins listed in Step 1
are made in four weights: 1 oz., 0.5 oz., 0.25 oz. and 0.10 oz.

* Gold bullion bars are sold in grams or ounces and include 1-oz.,
10-oz. and 100–oz. bars.

Find a source that sells gold bullion. Often the same dealers,
brokerage houses and banks sell both coins and bars. When assessing
the dealer, see how long they've been in business for, whether
they're certified with an industry or government body, and what
they specialize in. In the United States, the US Mint provides a
list of authorized sellers that you can check.[11]

* See Buy Gold Online for how to buy gold online.

* Jewelery stores sell gold jewelery but be sure to choose a
reputable store with a long time trading, as well as noting the
realities involved in "investing" in gold jewelery. Auctions can
be another source of gold jewelery but be aware that most auctions
will leave all the risk on you to have ascertained the value,
blemishes, etc.

* Ascertain the current market price for gold. Look online or call
the source to find out the current market price. After finding a
price, verify this price with at least one other reputable source,
and preferably with several reputable sources. Point out your
price research to a dealer if you are faced with any ridiculous
discrepancies in pricing.
Buy gold coins or bars at or below the prevailing market price,
plus a premium of approximate 1 percent. Most dealers have purchase
minimums, charged for shipping and handling, and offer quantity
discounts.

* Get receipts for all purchases and get a confirmation of delivery
date before you pay for the gold bullion.

* If purchasing jewelery, retain all receipts in a safe place. If
purchasing at an auction, remember to add on buyer premium and any
sales taxes.

* Store your gold, preferably in a safety deposit box.
This aspect is one of concern because clearly your gold assets are
only as safe as your storage. Invest in good quality security
mechanisms or pay a company to store it for you.[12]

!! Buy Gold Futures !!

* Open a futures account at a commodity trading firm. Futures allow
you to control a higher value of gold than you have in cash.

* Invest risk capital that you can afford to lose. If the price of
gold drops, you could end up owing more than you invested, once
commissions are added.

* Buy a gold futures contract. Each trading unit on COMDEX is
equivalent to 100 troy ounces. Electronic trading on the Chicago
Board of Trade (e-CBOT) is another way to trade gold. Gold futures
is a legally binding agreement for delivery of gold in the future
at an agreed upon price. For example, you can buy 100 oz. of gold
for a 2-year contract worth $46,600 for as little as 3 percent of
the value, or $1,350. The commodity trading firm charges a
commission for every trade.

* Wait for the contract to end and collect your earnings or pay your
losses. An investor can exchange a futures position for physical
gold, referred to as EFP. However, most investors offset their
positions before the contracts mature instead of accepting or
delivering physical gold.

!! Buy A Gold Exchange Traded Fund !!

Buy a gold exchange traded fund. Use the same broker or online broker
you would use to buy a stock or mutual fund to buy shares in a gold
exchange traded fund, such as GLD on the New York Stock Exchange. A
gold exchange traded fund is designed to track the price of gold,
while maintaining the liquidity of a stock.

* Note that gold exchange traded funds do not give you the ability
to physically control the gold. Thus some gold advocates believe
this is an inferior way to own the commodity.[13]

!! Video !!

!! Tips !!

* The United States Mint website offers a database of coin dealers
listed by state.

* Buying bullion is limited to weekdays during trading hours from 9
a.m. to 5 p.m. EST.

* The commission rate on gold futures trading is negotiable.

* Keep an eye on US Mint consumer alerts for scams and other shady
dealings.[14]

* Collecting gold antiquities can be profitable owing to their
historical value; however, this will be mired in issues of
legality, including the need to seek permits, etc. Black market
purchasing of such items is not only illegal but immoral; most
countries authorities consider that antiquities are items for all
of humanity, not just for a select few.

!! Warnings !!

* Never pay significantly more than market price for gold bullion.
(Typically, more than 5-20% premium above the spot gold price is
too much.) Avoid gold scams.

* Make sure you can tell if the gold is real to avoid wasting your
money on fake gold.

* Holding on to gold does mean that you're necessarily appreciating
your assets; you still need to be sure you're practicing good
money management at all times.[15]

* Don't tell people you're investing in gold. Doing so potentially
gives away that you're storing it in your house, or somewhere
equally vulnerable. Only tell people who really need to know, such
as a spouse, heirs in a will, etc. And seek very secure means for
storing it, including disguising it if need be.

!! Sources And Citations !!

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