Buying Gold

It is a fact that Countries and Governments, and billionaires and multi millionaires from many parts of the globe are buying gold in huge volumes right now. They are doing so to protect their wealth in these challenging and turbulent economic times that we are all facing. Gold is the safe haven they are running to because gold always has and always will hold its value.

But this doesn’t have to be a safeguard seized only by the rich and famous, conglomerates and institutions. Individual investors can take advantage of this opportunity to protect their wealth and secure their futures too. So here follows 10 things that you need to know about buying gold to help you get started.

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1. What Type of Gold To Buy

There are two options for buying physical gold. You can buy gold jewellery or you can buy gold bullion.

Whilst many women would initially choose to buy jewellery you should be aware that this is not the best form of investment. The reason for this is that the cost of crafting the jewellery is built into the price when you buy it so its value is not based completely on the prevailing price of gold. Jewellery is also subjective. Just because you find the particular piece attractive others may not, which means that it is not as liquid, i.e. it is not as easy to sell as gold bullion.

When it comes to bullion there is often a misconception that this is limited to gold bars or ingots, the type you would expect to find in the vaults of Fort Knox. That is not the case because coins are bullion too.

For the individual investor gold coins are the better option because they are more liquid than ingots. This is because you can purchase coins in smaller denominations. When you come to sell it is easier to sell a number of coins rather than one ingot of the same total value because you can sell the coins to more than one buyer.

When it comes to buying gold bars there are different sizes you can choose from. Whilst some people buy 10 oz bars the 100 oz ones are most common.

Coins also come in different sizes. You can buy gold coins in sizes of ½ oz, ¼ oz, 1/10 oz or even 1/20 oz but the most common size traded is the 1 oz coin.

Bullion is valued by its mass and purity as opposed to a monetary face value. The 1 oz coins and gold bars are .999 fine

Anything marked with .999 fineness or alternatively marked with ‘1oz fine’ is 99.9% pure and its value is based on whatever the gold spot price is at the time. It is not recommended that you buy gold marked in any other way. The standard is 99.9%.

2. The Different Types of Gold Coins

Gold coins fall into two categories – standard bullion coins and rare coins.

Standard bullion coins are minted by governments who then guarantee them. These coins become legal tender and are not considered to be collectibles; hence their value is determined by the current gold price. Different countries mint their own coins and give them their own names. For example America has the Eagle, Canada has the Maple Leaf, South Africa has the Krugerrand, Austria has the Philharmonic and China has the Panda.

All these standard bullion gold coins are basically the same apart from the fact that they contain different symbols according to the country that minted them. They all contain one ounce of 99.9% pure gold with the exception of the Krugerrand which contains a small amount of copper to make the coin more resilient. This copper is added though so the coin still contains one ounce of pure gold.

Rare gold coins are those which are no longer minted or are minted in short supply. As such they become collectors’ items and are known as ‘numismatic’. Examples of these are the British Sovereign, the Saint-Gaudens, the Liberty Head and the Indian Head.

Because of their rarity they are normally more valuable than the standard coins but from an investment point of view they are more risky. This is because their values are not determined by the gold price alone and because there are a number of fakes and forgeries in existence.

Unless you are an expert or have access to expert guidance it is wise for the individual investor buying gold to opt for the standard bullion coins.

3. What Determines The Value of Gold Coins

The price is generally set by the world’s largest commodity exchange, known as the
COMEX and which is located in New York City. The COMEX price of gold is what is more commonly referred to as the spot price of gold.

You will not be able to buy gold coins for the exact COMEX price because the seller will always add a mark-up to cover their dealing costs. This of course is how dealers make their profits. So you should always expect to pay a ‘premium’ and you shouldn’t view this as any sort of scam as it’s the way the market works.

The amount of mark up will depend upon the local demand, the size of the transaction and the particular dealer you are buying from. Anything up to 10% is the norm but you should steer clear of anyone asking for more than that.

4. What Influences The Price of Gold

Gold is no different to any other commodity in that its price in the short term is determined by the laws of supply and demand.

Over the longer term its price, which is determined in US dollars, has increased as the dollar has been manipulated. Since 1971 when the dollar moved away from the gold standard the value of the dollar has fallen and the price of gold has risen dramatically.

Gold has what is known as a negative correlation with other assets such as treasury bills, stocks and bonds and also with the value of the dollar. As these fall, so the price of gold increases.

5. How Gold is Performing

As you can see from the chart below, since the US government abandoned the gold standard in 1971, gold has consistently outperformed the stock market, real estate and currencies.

What is more, the gold price has seen a six fold increase since 2002. In August 2011 it hit a new high of just over $1900. Can it rise still further? You may want to watch the video below for a possible answer. Here Mike Maloney, author of ‘A Guide to Investing in Gold and Silver’, gives a logical mathematical explanation of why the price of gold could reach $15,000 per ounce within the next 3 to 5 years:

6. How To Store Gold

Because of its high value, before buying gold you need to give some thought to how and where you are going to store it.

There are 2 obvious options and these are the ones that most individual investors choose.

The first is a home safe. These are relatively inexpensive to buy. It may be worth paying a little more for one that you can bolt to the floor for additional security. Another tip is if you buy one with an electronic opening device controlled by batteries, make sure it has a backup manual facility for opening it such as a key or manual dial, and if it doesn’t make sure you replace the batteries regularly!

The second option is a safety deposit box at a bank. You should be able to rent one for between $50 and $100 per year and that will offer you storage for hundreds of ounces of gold. You don’t have to declare details of the contents to the bank and you should have access whenever you need it.

7. The Liquidity of Gold

The beauty of gold is that it is portable and liquid. You can sell it pretty much wherever you are in the world and its value is determined mainly by the prevailing spot price rather than local conditions.

If you follow the advice about how to buy gold given above and you invest in standard gold bullion 1 oz coins you will have the best possible chance of selling easily and quickly.

8. How To Sell Gold In Case You Need To

You can sell gold through the same channels that you bought it. Most dealers will buy gold from you as well as sell it to you. Speak to the dealer before you buy to check out what facilities they offer for buying it back and also what their charges would be. Just as when buying you should expect to pay above the spot price to cover the dealing costs, so you should expect to get below the spot price when you sell also to cover the dealing costs. This is known as the spread.

At times of high demand it may be possible to sell it for slightly above the spot price. The could be because the dealer has a buyer lined up and is prepared to take a smaller cut if he can turn it round straight away. If you do have to sell below the spot price you should avoid paying any more than 10% in dealers’ fees.

9. Why You Should You Be Buying Gold Now

We started this article by informing you that governments, billionaires and multi millionaires are buying gold like crazy right now. This is because they see the writing on the wall when it comes to the declining value of the dollar and the increasing size of the US National Debt.

Gold is a safe haven in turbulent economic times. It protects your wealth against the declining value of paper currencies. And the times we living in are just about as turbulent as they can be!

Prior to 1971 a dollar bill was actually worth a dollar but today it is just a piece of paper that we trust to be worth a dollar, a trust that is beginning to wear thin.

Most financial experts agree nowadays that gold and other precious metals should be a part of your investment portfolio. The only thing they don’t agree on is what the percentage should be. The consensus of opinion ranges between 10 – 30%.

10. Where To Buy Gold

You can buy gold online from a dealer or by visiting a store. You could also buy from friends or family. The most important thing is to make sure you only buy from a reliable and trustworthy source.

Research is essential and it is easy to do that over the internet. It is advisable to only buy from a dealer who has been in business for a number of years and is accredited to some sort of consumer protection organisation such as the BBB (Better Business Bureau). In order for the dealer to be accredited they normally will have had to go through an application and vetting process. They will also be rated in accordance with their past performance so it is best to choose a dealer with the top rating the organisation gives. So in the example given of the BBB this would be A+.

You should only buy gold from a seller who can offer you a certificate of purity and weight. The reasons are twofold. Firstly this will give you assurance of authenticity and secondly you will need to offer this to a potential buyer if and when you choose to sell.

The dealer that I recommend and who meets all the above criteria is Regal Assets. When I was first starting out I researched into lots of different sellers and must have requested over 20 gold investing kits! The most informative one by far was the one I received from Regal Assets. You can request one yourself by putting your name, email and phone number in the form below. Be sure to send your phone number because then one of the specialists there will give you a call. I found that I learnt more that way and by asking tons of questions than from all the other research I did.

Buying Gold – Conclusion

There is a very strong case for buying gold right now and this applies to everyday folk too. Many people might think that this is complicated and that you need prior experience or expert knowledge. I hope I have demonstrated above that this is not so and that anyone can take that first step towards protecting the wealth and prosperity of not just themselves but of their families too.

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People around the world are becoming increasingly aware of the importance of buying gold to protect their wealth. When times are good and there is an air of confidence in the economy most people prefer to invest in stocks and bonds. However as soon as the tide turns and recession hits they tend to turn to the safe haven of gold.

Why is Buying Gold Beneficial?

The more fragile the economy, the more attractive gold becomes to investors. Although it can be expensive initially to buy gold many view it as an essential investment for wealth protection. Gold is never affected by changes in the economy or in any industry or business. It has its own intrinsic value and it has proven itself historically to always increase in value over time.

It is a fact that gold can overpower currencies too. The Eastern part of the world in particular views gold as a very important asset and emerging countries like India and China are increasing their gold reserves and reducing their dependency on the US dollar. In fact it’s not an exaggeration to say that they are buying gold like crazy at the moment because between them they consumed 52% of the world’s gold last year.

In the past decade, the real values of most currencies have fallen considerably whereas gold has not experienced such a downfall. In fact whilst most currencies have fallen in value, so the value of gold has shot up. Since 2002 the price of gold has increased by 600%. This is a perfect example of why buying gold to protect your wealth is a smart decision.

Gold versus Paper Currencies

Inflation is the enemy of paper currencies even though ironically it is the continual printing of money that causes inflation. This is exactly why countries such as China and India plus billionaires and multi millionaires all over the world are trading dollars for gold right now.

Such are the times we are living in that the governments of many countries have lost control of their printing presses. The United States is a prime example. Since President Nixon decided to move away from the gold standard in 1971 and start printing paper money which wasn’t backed up by its gold equivalent in the nations reserves the US National debt has increased from $414 billion to $14 trillion.

The purchasing power of gold will always be high even if paper money becomes worthless.

Planning Your Gold Purchase

Despite all this, inexperienced investors in gold should tread carefully and do ample research before they take the plunge and buy gold. Does that mean that it’s risky to invest in gold? Yes and no.

Yes because there are unscrupulous dealers around plus there are fakes and forgeries when it comes to certain gold coins and gold bars.  No if you do your homework, you research what type of gold is safest to buy and you only buy from reputable, trustworthy sources.

The seller that I use exclusively now and recommend to all my friends is Regal Assets. I have always found them to be very helpful and trustworthy and they certainly put a lot of emphasis on customer service. I now have my own Account Manager there who is my main point of contact but whenever I have spoken to any of their other representatives I have always found them very knowledgeable about both precious metals and precious metals retirement plans which they can set up for you.  I have put a form to contact them at the top of this site. All you have to do is send them your name, email and phone number then one of their representatives will get straight back to you to discuss your requirements and to make arrangements to send you one of their complimentary Gold Investing Kits.

Buying gold should be a long term decision. It is not the right investment for people who are looking for quick gains for clearing their existing debts. Although the price of gold has increased six fold in almost a decade the ride upwards hasn’t been smooth and there have been short term ups and downs along the way. If you take a short term view you might win and you might lose. If you take a long term view you are much more likely to win.

The longer gold is retained, the more its value will increase. Gold is a relatively scarce metal and it is indestructible and portable.

A person’s investment portfolio should be a combination of high risk better returns and low risk and less return type of investments. Including gold in your portfolio will not only enable its diversification but also maintain stability. So when the market drops and you suffer losses on stocks, having gold in your portfolio will act as a hedge against these setbacks. This is because gold has a negative correlation with other assets such as treasury bills, stocks and bonds.

Gold thus acts as a solid measure of safety. Many financial experts nowadays recommend that you should allocate anywhere between 10 to 30 % towards gold in your portfolio. This will help to safeguard it and to protect your wealth.

A further benefit of gold is its liquidity. Having gold in your portfolio gives you quick access to cash should you need it at any time. The same cannot be said of other forms of investment such as real estate, stocks and bonds.

When planning your purchase of gold you should be aware that some forms give you more liquidity than others. Buying gold coins as opposed to gold bars is recommended for maximum liquidity. This is because you can buy gold coins in smaller denominations. It is easier to sell a number of gold coins as opposed to one gold bar of the same total value because you could sell the coins to more than one buyer.

Gold IRAs

Another way of leveraging gold to protect your wealth is to include gold in your IRA (Individual Retirement Account). A precious metal retirement plan can reduce the volatility of your retirement portfolio.  Including gold (or silver) can help make the safety and profitability of your retirement portfolio much more attainable. Gold IRA’s also offer the added benefit of enabling you to invest in gold in a very tax effective way.

The US government currently permits certain types of physical bullion and rare coins to be held in an IRA. You can learn more about this and how you go about transferring or rolling over your 401k or IRA into a precious metals retirement plan here:  Gold IRA – Frequently Asked Questions

Buying Gold To Protect Your Wealth – Conclusion

The turbulent times facing global economies right now is putting the wealth of everyone at risk. Wealthy individuals as well as many countries’ governments are already taking steps to protect themselves by buying gold and there is no reason why everyday folk cannot do the same. We hope that we have demonstrated in this article why and how the individual investor should leverage gold to protect their own wealth and that of their families.

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Introduction – The Case For Buying Gold

Buying gold has always been a safe form of long term investment and this is certainly the case right now given the turbulent and fragile state of global economies. Over time the price of gold has always increased and the level of increase tends to be more profound when the economy is in trouble.

This is because history shows us that gold has always moved counter to the direction of stocks, bonds and mutual funds. The technical terms are that gold is ‘negatively correlated’ or ‘inversely proportional’ to them.

There is a similar negative correlation between the US dollar value and the price of gold. So given the gradual decline in the dollar value, the mounting and forever increasing US National Debt and the fragile state of economies around the world it is not surprising that there has been a 600% increase in the price/value of gold since 2002.

Whilst this increase has been dramatic many financial experts are forecasting that this is just the start of things and that now is the right time to be buying gold. That is exactly what emerging powerhouse nations such as China and India are doing and many billionaires and multi millionaires around the world are following suit.

One of the many benefits of gold is that it has intrinsic value.  Gold has to be mined, it cannot be manufactured and it is a scarce commodity. Compare that to paper currencies that can be (and are being) printed at will and to which there is no longer true value attached, just trust.

The Case For Buying Gold Coins

Having established that now is a good time to be buying gold, let us explore the different options that are available and why it makes sense to buy gold coins.

Many people, women in particular, would prefer to opt for gold jewelry. But a word of caution here – this does not constitute the most profitable way to invest in gold. The reason is that the cost of making and crafting the piece of jewelry is built into the price and this will not necessarily be recovered should you decide to sell it. Plus the price of and demand for a piece of gold jewelry is subjective. It is based on more than just the prevailing gold price.

The remaining option available is to buy gold bullion. This can be divided into two categories, buying gold bullion bars and buying gold bullion coins.

Of the two, gold coins are better suited to the individual investor. Gold bullion bars vary in size but in the main are considerably bigger than gold coins and this makes them less liquid. It is more difficult to sell one bar or ingot worth say $25,000 than a number of gold coins making up the same value. That’s because the individual coins could be sold to a number of different buyers whereas the bar could only be sold to one.

The Benefits of Buying Gold Coins

So now let’s take a look at some of the benefits of choosing gold coins for your gold investments:

• Gold coins have intrinsic value
• Gold coins are easily available and can be purchased in different denominations.
• You can also choose them from the different weight options that match your budget.
• You will always be in possession of physical gold which is both portable and easy to store.
• Gold coins have maximum purity. Jewelry tends to be 18 carat or less but most gold coins are 24 carat pure.
• Gold coins are known for their liquidity and have better liquidity than gold bars. Thus they can be traded or exchanged in any part of the world at the going rate.
• Stocks that are related to gold can possess a risk factor but gold coins are a safer bet as their value is determined by just one factor – the current gold price
• Gold coins are a valuable asset and can be kept for years to yield excellent returns.

Different Types of Gold Coins

Before buying gold coins, it is also important to know the various types that are available. The ones which most investors tend to buy are the standard bullion coins such as the American Gold Eagle or the South African Krugerrand. You can sell these at their base value relative to the current market rates of gold.

The other types are the rare collectible gold coins which are also known as numismatic coins. Examples of these are the British Sovereign and the Saint-Gaudens. These tend to traded at a premium over and above the market rate of gold. Buying gold coins from this category is more expensive and you need to be experienced in buying them since there are a number of fraud or duplicate numismatic coins in existence.

Hence for a regular investor buying standard gold coins is advisable and not so risky. It’s safer to leave the rare coins to specialists or to those investors who have access to the opinions and advice of specialists.

Another thing to bear in mind is that the regular weight of a gold coin is one troy ounce. There are coins available in the markets that weigh less than this however and these too are more risky investments. Unless you really know what you are doing you could end up buying these for the regular price then only being able to sell them later pro rata to their weight.

Where To Buy Gold Coins

It is much easier to buy gold coins since the advent of the internet as this can be used both as a research tool to find gold dealers and as a vehicle for making your purchase.

You can use the internet to compare the rates of different sellers and then to do more in-depth research about the sellers themselves. It is important to check a seller out thoroughly before making a purchase from them.

It is recommended that you opt for an organization that has been in business for several years and which is accredited by a reputable trade organization such as the BBB (Better Business Bureau) as this means that they will have been independently vetted.

You’ve possibly already read elsewhere on this site that the seller I recommend is Regal Assets. You can use the form I’ve put at the top of this site to request one of their free Gold Investing Kits. Don’t forget to send your phone number because one of their knowledgeable experts will then call you to answer all your questions and walk you through the simple process of making your purchase.

It is worth knowing that governments of many countries sell gold coins online and these are reliable sources too.

You could also consider online shopping sites and auction sites such as eBay.

It is essential that the seller gives you a certificate of purity and weight for your gold coins. You will need this when you come to selling at a later stage. You should avoid any sellers who do not offer the necessary certification.

Buying Gold Coins – Summary

Most financial experts agree that now is the time to be adding gold and other precious metals to your investment portfolio. You can do this by buying ETFs (Exchange Traded Funds), by buying stocks and shares in gold mining companies, by trading gold futures and by buying physical gold. The less risky option is to buy physical gold.

When buying physical gold you can choose between gold jewelry and gold bullion and if your aim is to maximize your return you should choose gold bullion.

When purchasing gold bullion you can choose between gold bars and gold coins. Gold coins are more practical for the individual investor as they are more liquid than bars, plus easier to store and carry around.

You can choose between standard gold bullion coins or rare numismatic gold bullion coins. The standard ones are less speculative, potentially less profitable but overall less risky.

Buying gold is much easier nowadays as you can take advantage of the internet to do your research and even to make your purchases.

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If you are completely new to buying gold in its physical form then you are definitely going to have a lot of questions. Most people who have never invested in gold at all have no idea how the process works and what the best way is to go about making a gold purchase.

I’d like to share with you three frequently asked questions about buying gold. Then I’ll answer them so that you can get a basic understanding of the gold buying process for yourself. So let’s take a look at those three questions right now.

Buying Gold Question #1 – What is the difference between the terms ‘bullion’ and ‘numismatic’ and how do they pertain to gold?

It’s very important to know the difference between both of these terms when you are going to be buying gold coins.

The way numismatic coins work is that they are looked upon through a grading scale and these are typically the type of coins that gold collectors purchase as opposed to gold investors. The way you will assess gold bullion coins is by the amount of gold that each coin contains and what it would be worth to you from an investment standpoint.

So if you’re looking to buy gold as an investor then gold bullion is the way to go. But if you’re looking to buy gold as a collector then you’d be much better off with numismatic gold coins.

Buying Gold Question #2 – After I am finished buying gold, where would I store my purchases?

This is obviously a big decision because you need to make sure that your gold purchases are safe and sound. You also need to make sure that you have easy access to your gold any time you want.

That’s why I specifically recommend that a person store their items in a safety deposit box or home safe when they are buying gold. This will obviously keep your gold very safe, and you actually kill two birds with one stone. Firstly you will be keeping it hidden from a burglar or intruder. Secondly you will have easy and quick access to your investment in case you have a need or desire to sell it in a hurry.

So it’s definitely a good idea to keep your gold in a safe, secure and convenient location and a bank safety deposit box or a carefully hidden home safe are good options.

Buying Gold Question #3 – How do I know if the gold dealers I’m interested in are honest?

Well, you’re going to have to do a little bit a research on the topic, which is basically what you’re doing right now. I recommend you check into this one particular online gold seller that has a stellar reputation. They’re named Regal Assets and my experience with them has been first class. They are the only place I ever go to now to buy gold and other precious metals. So much so that I now consider them as my friends.

If you’re seriously interested in buying gold I suggest that you take the first step now by putting your name, e-mail address and phone number in the form below. One of the Regal Assets specialists will contact you and set you up with a free investors’ kit and answer any questions that you might have.

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Buying Gold information coming soon!