In these challenging economic times more and more people are turning to gold as a source of investment. Here are a few tips for new investors and people who have been buying gold but want some simple reminders:
1 – Research which gold will be best for your investment.
Gold can be bought in three forms:
• Gold coins
• Gold stocks
• Gold bullion bars
If you truly want to invest in gold, and are not a numismatist, then you do not want to purchase gold coins. Buying gold coins is not the most economical way to invest.
The most economical investment will usually be found in gold bullion. Of course, this depends on the amount of money you have as an investor. Gold is sold by the ounce and as you increase the number of ounces the price of the ounce goes down.
Gold bars are sold in one or half ounce bars and as large as 400 ounce bars. The largest is a kilo. Also, as you purchase more ounces the percentage on the commission charged will usually lower. If you have ample fund then bars are the most lucrative venture.
2 – Do your research to determine the best price.
The news media reports the gold futures on a daily basis, not the current price. Find out what gold dealers are actually charging. You can also get an idea from auctions sites such as eBay. Always be cautious before purchasing online; make sure the item is genuine and practice due diligence.
3 – Consider GoldMoney.
GoldMoney is an option for the person who wants to open an account, buy gold, transfer among accounts, and store the gold offsite in a bank in London or Zurich. The gold can be redeemed in the form of one kilo, so it takes a sizeable investment. The gold is audited on a regular basis and insured against theft.
4 – Commit to being consistent.
If you are serious about buying gold, make a commitment to be consistent in making the investment purchase. This can be monthly, quarterly or annually, but make the commitment to buying gold on a regular basis and doing your research. The price will go up and down, but the value will even out and eventually rise in the long run.
5 – Protect your gold investment.
If you store gold in your home, make sure you have enough homeowners insurance to cover its value. If not, your insurance needs to be increased. The proof of ownership will be your responsibility, but do it and have the insurance reviewed on a regular basis.
6 – Invest wisely.
If you are a gold coin collector, start by collecting the older coins first because that’s where the value is. They are rarer and they have more gold in the metal content. When the gold price goes down, fill in the coins that you are missed during the gold-buying frenzies.
7 – Diversify.
Buying ETF’s (exchange traded funds) or mining stock is a way to diversify and hedge your portfolio. It isn’t as pretty as bullion or coins, but it is a good way of investing.
So do your homework and decide how you want to proceed in making your gold investments. Don’t let the price of gold scare you out of moving ahead and investing. Over the years you won’t be sorry.
About the author: Mitchell Gavillion is a professional financier who offers money and investing advice.
Credits: Photo courtesy of Paula Rey.