A precious metal, shining like a fire blazing in the night, glittering like sunlight reflected from water waves, found in every investor’s portfolio… Gold is indeed valuable; if you can afford it, then, go for it!
There are many ways to buy gold. So if you’re new to this game, read on as we take you through the smooth path on how to get started.
Gold is an important asset that people admired and accumulated throughout history. According to World Gold Council, the annual volume of gold bought by investors has increased by at least 235% over the last three decades, and just for the investment demands.
Other sectors like technology rely on gold for innovations in electronics, and Central Bank for the financial crisis.
If you’re considering investing in gold, it’s important you learn more about how it works and the best way to invest in it. The table below will give you an overview of what you should expect in this article.
How Can I Buy Gold?
Before buying gold, it’s imperative you learn some factors that make gold unique:
- Newly-minted coins are typically 90% to 99% gold
- Jewelry is between 14-karat (58%) and 18-karat (75%)
- Pure gold is 24-karat (100%)
- Having gold stocks does not entitle you to possession of the metal
- Storing physical gold incurs a cost
- Gols mining is economical when the price rises.
- Gold holdings are heavily concentrated among a limited number of governments and central banks, exposing gold to extreme price fluctuations as these institutions buy and sell.
What Type of Gold Should I Buy?
The form of gold that you buy is far less important than the fact that you buy gold. Purchasing gold of any quantity at any time is not necessarily a bad idea but, it is relatively safe to buy Bullion bars and ingots. Gold bullion bars typically require some level of independent authentication in order to liquidate.
It is relatively easy to buy a gold bar, and once you purchase it, you don’t need to do anything but store it.
When Should I Buy Gold?
Just like other forms of investments, when you want to purchase gold whether, in coin, bullion, or stock form, you have to “buy low and sell high”. Ensure you research the type of gold you want to buy and then keep your eye on the market.
Generally, people buy gold when the economy is in a recession. Most people buy gold as a type of financial insurance policy to hedge their bets against the value of the dollar in the market.
Gold holds a value even in times of inflation. Backdate to history, Gold value increased from $35 per ounce in 1971 to $180 per ounce in 1974, that was such a perfect time to buy gold.
Why Should I buy Gold?
People generally buy gold for insurance and investment purposes. If you’re concerned about the recent economic crisis, you can view your ownership of gold as an insurance policy. If you own physical gold or silver to sell or trade, you will never be broke, even if the economy collapses.
Two of the most straightforward coins to buy and sell are the Canadian Maple Leaf and the American Eagle gold bullion coins. The 22-karat Canadian Maple Leaf is valued at 50 Canadian dollars and typically sells well in countries outside of the U.S., while the 24-karat American Eagle bullion coin often sells well within the U.S.
Another is the U.S. mint; It offers 24-karat American Buffalo coin through reputable dealers, costs more upfront, and is less popular than the American Eagle.
Other common bullion coins are the South African Krugerrand, produced by Rand Refinery and the South African Mint, and Australian Gold Kangaroo coins from the Perth Mint.
Jewelry is not very lucrative for investment. Finding valuable gold jewelry can be time-consuming. Also, retailers add up to a 400% markup on gold jewelry, making it uncertain that you will be able to recoup your investment later.
Another popular form of gold investment is Mining stocks. This involves owning a share of the process of mining gold by investing in companies that own mines. Although Gold stocks are a risky form of investment, they are highly lucrative and profitable.
Who Are The Top Gold Mining Stock?
Below is a table that shows the top three gold stocks that are most likely to succeed.
|Barrick Gold (NYSE:GOLD)||One of the world’s largest gold mining companies|
|Franco-Nevada (NYSE:FNV)||A leading gold-focused royalty and streaming company|
|SPDR Gold Trust (NYSEMKT:GLD)||An ETF that holds physical gold|
Factors that Can Influence the Price of Gold
The current price of gold is called the “Spot price,”. The spot price reflects the most recent average bid price, according to global professional traders.
There are factors that the spot price can rise on any given day. Let’s take a lot at the most common ones.
Supply and demand
Just other commodities, the higher the demand of gold, the greater the prices. Likewise, increased in supply leads to reduced gold prices.
The cost of gold is typically dependent on the value of the dollar. When the value of the dollar goes down, gold prices go up.
Seasons influence the price of gold; During the month of September, gold volumes pick up and continue to rise to go into October and November. December can vary, and the market depends heavily on the gains investors have earned throughout the year.
Buying common mints and less common mints of gold coins come with a benefit. When you are in need of cash, you can easily sell one of these more popular mints of coins.
Country of origin
According to Fraser and Pederson, “First, you want to determine which region of the world the project is in and avoid regions of the world where there is political and social unrest, dubious law enforcement, confiscatory royalty mindsets, nationalization ‘rumors’ and high taxation.”
According to Durrett, companies focused in Mexico and South America have low price structures but high energy costs, which can affect the bottom line.
Fraser and Pederson advise investors to “always remember the number one goal of any management team should be to maximize shareholder value.” Durrett also advises investors to pay attention to the websites of management companies and to consider it a red flag if a management company doesn’t send out newsletters and update their website with market trends and news.
How to Avoid Gold Scams- Best Tips
Remember the saying, “Not all that glitters are gold”. Therefore, before you jump into the purchase of gold, ensure you research properly. There are certain places and people to avoid when buying gold.
Avoid dealers with no actual location, insisting you call them immediately for a limited time for massive discounts on gold. Take your time and search for a reputable dealer.
Here are some red flags to consider when scouting for a dealer:
- There is currently a type of commemorative coins in circulation called proof coins, they usually come in a special case and are finely polished to look more attractive than ordinary coins. If you’re using gold as an investment, avoid them- its monetary value is not guaranteed to stick around long term.
- Ensure you store your gold in your own safe or safe deposit box to reduce your likelihood of getting taken advantage of.
- Avoid dealers that offer free storage or delayed delivery. They might not be legitimate, and you may never see the gold that you paid for.
- Coins are available in a variety of fractions, including a half-ounce, quarter-ounce, and even a twentieth-ounce. You are better off buying a full ounce because the fractional amounts have a higher premium.
Gold is the generally accepted symbol of wealth. The trick to achieving success with gold is to know the risk profile before jumping. If you intend to buy gold, carefully follow our tips. They will benefit you a lot.