You don’t need to turn your walk-in closet into a miniature Fort Knox if you want to acquire gold. In actuality, an investing account may be the only storage you need.
How to Buy Physical Gold
Gold Bars
Bullion, sometimes referred to as gold bars, is a typical option for buyers of gold. The purity, maker, and weight should all be stamped on the front of the bar for selling gold or silver, which is commonly done by the gramme or ounce.
Purity is crucial when purchasing gold: Gold bars of investment grade must contain at least 99.5% pure gold. This is crucial if you want to keep gold bars in a gold IRA since you cannot have less pure gold there unless it is a gold coin that has been explicitly authorized for holding in an IRA.
You may purchase gold bars from merchants, private sellers, or internet retailers like JMBullion, APMEX, or SD Bullion. Additionally, bear in mind that you can be responsible for paying delivery costs as well as insurance to ensure the safe shipment of your bullion.
Gold Coins
Popular collectibles include gold coins like the American Gold Eagle and the Canadian Maple Leaf. Therefore, you should expect to spend more than you would for the same quantity of gold in bullion.
Coins often contain less gold than gold bars do. For instance, only 91.67% of an ounce of American eagle coins are made of gold. The coin really weighs 1.1 ounces, of which around one ounce is pure gold and the remainder is made up of silver and copper.
You may purchase gold coins through merchants, pawnbrokers, and trusted private sellers. Choose a dealer from the U.S. Mint’s database if you decide to purchase your gold coins online. You don’t want to squander money on counterfeit coins or gold that isn’t as pure as you were led to think, whether you purchase your gold coins locally or online.
Jewelry
Jewelry, particularly old-fashioned items, may be another way to purchase gold. However, similar to gold coins, you’ll probably have to pay more for the real quantity of gold you get; this premium might range from 20% to 300%, depending on the producer.
Additionally, remember that not everything that glitters is gold. Gold-based alloys are used by manufacturers to strengthen or change the colour of their products. Here is a correlation between gold purity and quality (measured in karats).
When purchasing gold jewellery, you should exercise extreme caution, just like when buying coins. Make sure the jewellery seller has a good reputation before you buy. You may start with jewellers who had joined the Jewelers of America and adhered to a code of conduct that required them to be open and honest about the characteristics of their items.
To be able to vouch for the purity of your gold when you resell it, you’ll want to make sure you have as much paperwork as you can.
Factors to Consider When Buying Physical Gold
If you want to purchase actual gold, you should bear the following in mind:
Storage
A safe place is needed to keep physical gold. Even while it’s possible to store gold at home, many investors choose a custodian. Before purchasing gold, be sure to look into safe storage choices. Also, keep in mind that safe storage raises the price of your gold investment.
Insurance
If you want to keep your gold at home, you should insure it to guard against theft or natural calamities. This may increase the price of your renters’ or homeowners’ insurance. Even if you don’t store your gold at home, you should look into the insurance coverage offered by your storage provider to see how it is safeguarding your investment.
Manufacturer
Considering that you’re investing, you’ll want to choose reliable vendors that can support the appreciation of your purchase over time. Look for reputable manufacturers when purchasing gold, such as Credit Suisse, the Perth Mint, and the Royal Canadian Mint.
Purity
A coin, bar, or piece of jewelry’s value and usefulness as an investment tool are significantly influenced by the amount of gold contained within. Make sure the gold you buy has the purity level necessary to endure the test of time. As a result, you are likely aiming for gold objects that are at least 91% or even 99% pure.
Other Ways to Buy Gold
If all of that seems like too much work but you still want some bling in your investment portfolio, think about buying stocks, mutual funds, and exchange-traded funds (ETFs) that are tied to the gold sector.
Stocks of Gold Mines
You may purchase stocks in businesses that mine and process gold as an alternative to investing in actual gold. Top gold mining firms include Newmont Mining Corporation and Barrick Gold (GOLD) (NMC).
Even if the price of their stocks may not exactly follow the price of actual gold, they will probably be connected. This allows you to invest in gold without taking on the hassle or danger of touching actual gold.
Gold Mutual Funds and ETFs
Through gold mutual funds or ETFs, you may invest in a variety of gold-related assets as opposed to just one firm that is linked to gold. Gold funds may give exposure to gold futures and options, numerous gold mining and refinery equities, or they can monitor the price of gold.
Among the best gold mutual funds and ETFs are:
- IShares Gold Trust (IAU)
- Invesco DB Gold Fund (DGL)
- Franklin Gold and Precious Metals Fund (FKRCX)
Futures and Options
Futures and options may be appealing to investors who are ready to assume more risk. (If none of those terms already have any meaning for you, you should definitely stay away from these gold investments for the time being since they are quite speculative.)
With gold futures, you make a commitment to purchase or sell gold at a certain price in the future. A gold options contract gives you the right to purchase or sell gold if its price reaches a certain level by a given date.
Successfully purchasing gold futures or options requires a brokerage account and in-depth understanding of the market. To ensure that you don’t lose the opportunity to put your alternatives into action, you’ll need to keep a tight eye on both the price of gold and your account. As futures and options often entail taking on leverage, or using borrowed money to acquire assets, you can also wind up amplifying any losses you suffer.
Is Gold a Good Investment?
You’re likely in the wrong area if you’re hoping to become wealthy in a modern-day gold rush. In the last five years, the price of gold has climbed by around 36%, whereas the S&P 500 has grown by 104% in the same time frame. Why then the fuss?
Considering that some believe gold to be a safe refuge against inflation and sharp market declines. For instance, the whole stock market fell 33% during the 2007–2008 bear market. Gold, however, only decreased by 2%.
However, given that gold prices may be quite erratic, it is not a completely (or even mostly) secure investment. In fact, you don’t even need gold to have a well-diversified investing portfolio.
However, strive for it to take up a minimal portion of your investment funds if you want to capture part of that golden glow.
