If you’re a keen investor, or if you’re relatively new to the game and you’re exploring all your options, then you’ll have thought at least once about buying gold. You can buy it through exchange-traded funds or stocks, but the easiest way to do it is to buy this precious metal physically in the shape of bars or coins. Here are the basics…
Are bars or coins best?
It depends on what you’re planning to do, really. When you buy gold coins they are much more flexible when it comes to buying and selling – if you want to sell 10% of your stock of 100 gold coins, then all you need to do is sell ten coins, right? If you have a larger bar, then you’d need to sell all of it or nothing. Of course, you can buy 1oz gold bars from Golden Eagle Coins, as well as larger bars if you’re looking to invest long-term.
Gold coins are more complicated
Not all gold coins are the same. Some are much more expensive and valuable than others because they’re rare, or very old. These types of coins are collectibles and they’re known as numismatic coins; they’re valuable in more ways than just being gold.
If you’re just starting out, though, then you’re best off looking for coins that are valued according to the price of gold. These coins include the South African Krugerrand and Canadian Gold Maple Leaf coins.
Your expenditure
Of course, one of your main considerations is how much you can spend. Gold dealers want to make a living just like anyone else, so they buy their coins in at just below the market price and sell them just above. This difference, or spread, changes according to demand, market conditions, and your individual dealer.
The cheapest gold is to be found in Hong Kong, but unless you live there yourself, you’d have to be buying huge amounts to make up for the cost of your flight. It’s best to buy as locally as possible and use a courier. Many dealers offer free delivery if your order is over a certain value.
You need to think carefully about when to sell your gold again because you’ll be selling it to a dealer at just under the market price. If your stock has appreciated in value by 50% since you bought it, then selling at 3% below the market price isn’t too bad. If it’s only gone up by 5%, though, then you might want to wait.
How should I store my gold?
The biggest advantage to owning physical gold, whether it’s in bars or in coins, is that you’ve got easy access to it in the case of a financial meltdown. It’s a great insurance policy and if there’s ever a time when stocks and even currencies fall in value to the point of being practically worthless, then you have something that’s still valuable.
Of course, you must look after your gold so that no-one steals it. A safe somewhere in your home is the easiest and most obvious solution. There’s also the option of a bank’s safety deposit box, but you might not feel right with this. If you do keep your gold at home, then you’ll need to insure it, which could increase your monthly premiums – you’ll need to do the math.
