How to Buy Gold and Invest in it
Gold has been around as far back as anyone can remember. This yellow metal is also considered a precious metal. In fact, so precious that it has and still is used as a tool of trade in various scenarios. Just to jog your memory, gold was used as a guarantee for paper currency up to 1934.
In times of unforeseen economic difficulties, gold offers a way out, thanks to its stable purchasing power even in such times. With that in mind, it is important you have gold as part of your investment portfolio.
Advantages of investing in gold
There are numerous reasons why you should invest in gold. Some of these advantages cannot be found in other forms of investment. In addition, you can use gold to protect your wealth from shocks in the stock market. So, here’s why you should buy any form of gold.
- Gold is a tangible asset. Do you know that you can carry $50,000 worth of gold coins in your pocket? How cool is that? Even better is that gold cannot be destroyed by water, fire and time. This alone is enough to convince you to invest in gold.
- Very liquid. There are gold dealers across the world and if you can’t find one within your area, then you only need to google one on the internet. This means that you can sell and buy gold at any time and anywhere to a huge customer base.
- No counterparty risks. With gold, you don’t need the approval of any bank or government for that matter. As such, this means that it’s not anyone else’s liability when you buy or sell your gold.
- Dense in value. As mentioned earlier, you can pocket $50,000 worth of gold. Now, how much in value do you think you’ll be able to stash in a mini-safe? Compare that to the number of dollar bills you’ll have to pile.
- Confidential and private. Since it’s not anyone’s liability, then it’s not anyone’s business when you buy or sell gold. You can do that from the comfort and privacy of your home without having to pay taxes or anything of that sort.
- The best store for value. Gold prices fluctuate. However, not as much as the US dollar. Gold will retain its value for quite a long time while the dollar has lost almost 98% of its value since the Federal Reserve was set up in 1913.
- Cannot be erased or hacked. The digital age came with lots of goodies and losses in an almost equal measure. Take for example the hacking of various sensitive accounts that has led to billions of dollars in losses. With this in mind, it is advisable to steer clear of digital wealth and instead invest in gold.
Various Forms of Gold
- The American Gold Eagle
This is the official gold bullion produced by the United States. The first to be released was in 1986 by the U.S. Mint and features the Lady Liberty on one side and the other features an eagle with an olive branch in its beak.
The gold eagle coins are available in 1 ounce, ½ oz, ¼ oz and 1/10 oz with a face value starting from $5 all the way to $50. In addition, the coins are alloyed with silver and copper to ensure their durability. The former constitutes 3% and the latter 5.33%.
- Canadian Gold Coins
The Canadian coin is referred to as the Canadian Gold maple and is produced annually by the Government of the Dominion of Canada. The coin has a face value of 50 Canadian dollars with 24 karat content and fine to .9999.
One coin weighs just about 1 troy ounce with values starting from 1 gram which is 50 cents, 1/20 ($1), 1/10 oz ($5), ¼ ounce ($10) while ½ oz goes for $20. On one side, you have Queen Elizabeth II of Canada and on the other, you’ll see a Canadian maple leaf. In 2015 going forward, security features were included in the coin.
There are special maple leaf coins that have a face value of $1 million each.
- Australian Gold Coins
The gold coins from Australia are referred to as Australian Gold Nuggets and are produced by the Perth Mint which also produced the first of the series in 1986. However, in 1989, the coins featured kangaroos which are also synonymous with Australia. Note that these coins can be used as both bullion coins and legal tenders.
This 24-karat coin comes in new designs every year. As a result, the numismatic value of some coins could be way higher than the gold they contain. They are produced in the following sizes, 1 kilogram and 20 ounces, 2-ounce, 1 ounce, ¼ oz, 1/10 oz and 1/20 oz.
Something of interest is that in 2011, the Perth mint produced a 1-tonne coin which came with a face value of $1 million and become the most valuable coin of all time. There are Australian Gold Lunar bullion coins as well that come with a .9999 purity.
- The Krugerrand
This is a South African coin that was minted in 1967 and had a great impact in marketing South Africa. In fact, this coin contributed to about 90% of the gold coins in the world. It has then been used as a gold bullion and a legal tender.
On one side, the coin features South African president, Paul Kruger, who ruled from 1883 to 1900. On the other, you have the Rand, which is also the South African currency. This coin weighs about 1.0909 troy ounces and is 91.67% pure (22 karats). This means that the remaining percentage is made of copper and comes in 3 sizes that is ½ oz, ¼ oz and 1/10 oz.
- Gold Bars
A gold bar is also referred to as an ingot or a bullion. The bars are made by a bar producer who has to meet certain terms to manufacture bars and is made from gold. Big bars are formed by pouring molten gold into ingots while the smaller ones are made of stamped sheets or can be minted.
400 troy ounces is the standard gold bar known as the Good Delivery bar. These types of bars are held in the Central bank’s reserve while the smaller 32.15 troy ounces are used for trade and investment purposes.
- Gold Rounds
These gold rounds seem identical to the coins, but don’t bear any currency value. However, their value is close to the spot price compared to a coin of the same size. Gold rounds come in various sizes starting from 0.05 troy ounces up to 1 troy ounce.
More often than not, these rounds have no additional metals and are not a collector’s favourites as the gold coins are.
The Best Places to Buy Gold and Silver Online
There are countless personal finance apps out in the market. Once you find an app that solves your problem, then that is what will work for you. Otherwise, there’re apps for every situation.
- Lear Capital
At Lear Capital, you can buy silver and gold with a 30-day price guarantee with no minimum investment. In addition, you will have to pay $160 fee per year for storage, financial statements and insurance while offering online access at any time. Lear Capital has partnered with Delaware Depository for storage purposes.
At Apmex, you have a wide variety of IRA-approved products to choose from including collectibles. However, you’ll need to place a minimum investment of $2,000 and a yearly fee of $75 as well as $50 as a setup fee. On top of that, you’ll be charged $100 as a storage fee by Delaware Depository.
- Goldco Precious Metals
Goldco is an authorized IRA broker of gold and silver. Minimum purchases stand at $25,000 and you’ll be charged $175 yearly fees and $225 if your account is over $100,000. Storage facilities are all IRS-approved depositories with first year’s fee refunded.
- Birch Gold Group
Birch Gold Group offers a number of precious metals. Should you exceed $50,00 in transfers in the first year, then you’ll have to pay. The group also requires that you make a minimum purchase of $10,000 as well as a $90 fee for setup. In addition, you’ll have to part with $160 for storage facilities offered by Brinks Global Service and Delaware Depository.
- The Hartford Gold Group
This has got to be the best dealer in the market. This is because this silver, platinum and gold dealers require no minimum contributions. In addition, the fees will depend on the number of metals held in the depository and the type as well.
In some instances, the storage is offered for free and there are no transfer or setup fees. Delaware Depository and Brinks offer storage facilities.
Various ways to store your gold
When you buy gold, you can store it yourself or pay for storage services. If you decide to keep it yourself, you can store it inside a safe, coin capsules or storage boxes.
If you decide to pay for storage services, you can pay your bank to store the same in a safe deposit box. Nevertheless, you need to keep in mind that banks offer limited access to the deposit box dependent on the hours of operation of the bank. Contrary to popular belief that bank storage is secure (they are to some extent) but you’ll need to insure the contents of the box on top of paying for the storage service.
The size of the gold in question also plays a role in where you can store the same. Massive bars can be stored in a depository and an insured bullion. This is perfect for those with massive amounts of gold. What’s more is that in the depositories, the gold is more liquid because it is available for sale 24 hours a day for only 5 days.
How to sell your gold
Selling gold is quite easy online. All you have to do is find a renowned online dealer, watch the prices and choose when best to sell. There are pawn shops that also buy and sell gold. However, the downside to these shops is that they will more often than not buy the gold at a lower price.
Gold is timeless, a time capsule that can insulate your wealth against harsh economic times that may hit you. As such, it is important that you invest a substantial amount in this yellow metal. With the above information, you can choose the best dealer once you have identified your preferred form of gold you wish to invest in.
You can also contact a knowledgeable professional on such matters to help you craft a suitable investment path for you.