You don’t need to turn your walk-in closet into Fort Knox if you want to buy gold. You may only need storage if you have an investment account.
Buying Physical Gold
People looking to purchase gold bars, also known as bullion, are tempted to choose these bars. Bullion is usually sold by the gram or the ounce. The bar should bear the purity, manufacturer, weight, and weight.
Purity is crucial when purchasing gold. Investment-quality bars of gold must contain at least 99.5% pure. This is particularly important if you plan to store bars within a IRA. Bars less than 99.5% pure gold cannot be stored in an IRA, unless they are a pre-approved gold coin.
Gold bars can be purchased from dealers, individuals, or online through sites such as JMBullion or the American Precious Metals Exchange, (APMEX), or SD Bullion. To ensure safe transportation of your bullion, you might be responsible for delivery fees and insurance.
Popular collector items are gold coins like the American Gold Eagle and Canadian Maple Leaf. You’ll pay more for a similar amount of gold in bars than you will for coins. Additionally, coins are more gold-rich than gold bars. For example, a one-ounce American Eagle coin is 91.67% pure gold. The rest of the metal is silver and copper. However, American Eagle coins can still be kept in gold IRAs.
There are three options for buying gold coins: dealers, pawnshops or individual sellers. You should only buy gold coins online from a U.S.-listed dealer. The Mint’s database. You don’t want your money to be spent on fakes or gold that isn’t as pure as you think.
You can also buy gold through jewelry, particularly antique pieces with a higher percentage of gold. Keep in mind, however, that you will likely be paying more for the actual amount of gold you get than you would for gold coins. It could be as high as 30% to 380% depending on which manufacturer it is.
Keep in mind, however, that not everything that glitters is always gold. To make their products more durable or to adjust their colors, manufacturers use alloying. Here is how purity and gold quality are measured in karats.
You should be careful when purchasing gold jewelry, just like you would with coins. You should ensure that the jeweler you buy your jewelry from has a good reputation. Start with jewelers who are members of Jewelers of America. They will have to sign a code of professional conduct that requires them to be truthful and open about the nature of the pieces.
So that you can attest to the gold’s quality when you sell it, you will want as many documentation as you can.
What to consider when purchasing physical gold
You should be aware of these things before you buy physical gold.
- Storage: Physical Gold requires secure storage. Although you can keep your gold at home it is possible to have it stored in a safe place. Many investors prefer having a custodian. Before you purchase your gold, make sure to research safe options. Also, keep in mind that safe storage can increase the cost of your investment.
- Insurance: You should insure your precious metals to protect you against theft and natural disasters. This could increase the cost of renters or homeowners insurance. Even if your gold is not kept at home, it is worth checking the insurance policy of your storage provider to see how it protects your investment.
- Manufacturer As an investor, it’s important to ensure that you only buy from reliable sources that will increase your investment’s value over time. Look for trusted producers such as Credit Suisse, Perth Mint, and Royal Canadian Mint when buying gold.
- Purity The value of an investment tool, such as a coin, bar or jewelry, is directly affected by the gold content. You should ensure that any investment gold you buy has the right purity to withstand the test of time. This means that you should be looking for gold items at least 91% pure, if possible 99%.
If all that seems like too much hassle but you still want some bling in your portfolio, then consider investing in stocks and mutual funds related to the gold sector.
Stocks of Gold Mines
Instead of investing in gold itself, you can buy shares in companies that mine or refine it. Barrick Gold ( Gold) is a top gold mining company. Newmont Mining Corporation ( NMC) is another.
Although their stock prices might not match the price of physical gold, they are likely to be closely related. This allows you to invest in gold without having to deal with the hassle and risk of physical gold.
ETFs and Gold Mutual Funds
Instead of investing in one company that is tied to gold, you can invest in a group of gold-related securities via ETFs or gold mutual fund. Funds that track gold’s price may include stocks from multiple gold mines or refineries, as well as exposure to futures and options.
These are the top gold ETFs and mutual funds:
- iShares Gold Trust (IAU).
- Invesco DB Gold Fund, (DGL),
- Franklin Gold and Precious Metals Fund, FKRCX
Futures and Options
Futures and options might be appealing to investors who are willing to take on greater risk. If neither of these words are meaningful to you, avoid investing in gold for now. They are highly speculative.
You can buy or sell futures gold at a specific price. A gold options contract gives you the right to either buy or sell gold at a specified price, if it is not reached by a specific date.
A brokerage account is essential for buying gold options or futures. It also requires extensive industry knowledge. To make sure that you are not missing out on your opportunity to take action, you will need to closely monitor your account and the gold price. Your losses could be magnified if you take on leverage or borrow money to purchase securities.
Is Gold a Good Investment?
You’re not in the right place if you want to make it big with a modern-day Gold Rush. The S&P500 has increased by 104% over the same time period. Gold’s value increased by 36% in the last five years. Why all the hype?
Some see gold as a safe harbor from extreme market drops and inflation. The stock market plummeted 33% during the 2007-2008 bear markets. The gold price, however, fell only 2%.
However, gold prices can fluctuate, so it isn’t always a safe investment. You can actually create a diversified portfolio of investments without having to invest in gold.
However, if you really want to see that golden glow in your investment account then make sure it is only a small portion of your total investments.