How to Buy Gold

Stockpiling gold has been a favorite investment of the wealthy throughout history, and the gleam of gold is still irresistible to many investors today, with gold being the most popular investment out of all the precious metals. Some people like that gold is a tangible asset that will retain its value even if paper currency loses its value, while other investors are attracted to the liquidity of gold. For many, gold is a way of riding through the rise and dips inherent in economies, with gold serving as the "only real hedge against the massive financial excesses that still prevail in the western world". Moreover, gold is fungible, liquid, portable, and accepted anywhere in the world. This article offers several ways to buy gold or add gold to your investment portfolio.

Decide why you're interested in buying or investing in gold. Gold is expensive, and keeping it on your premises does bring certain security concerns with it. If you're already in financial risk, gold investment probably isn't for you until you've cleared some of your existing debts. Once you have cleared your debt and have money to invest, consider traditional investments in stocks and bonds first, as they tend to outperform gold over the long-term. Understand that gold mainly serves as a store of value and as an investment hedge. If you have some spare investment funds, it's important to decide why you're keen to invest in gold, so that you know it's the right thing for you. Common reasons for investing in gold:

Reasons to buy Gold

• Gold is always in high demand. It is a tangible product that can always be passed on without concerns for its desirability in the future. Contrast this durability with antiques and collectibles, which are subject to the whims of every generation's interests.
   
• Owning gold can protect you from a decline in currencies or from inflation. Countries often start investing in gold when the economic times start to nosedive, and the more debt-laden an economy, the higher the price of gold per ounce will likely head.
   
• Gold can be another "string to your bow" when you seek to diversify your investment portfolio. Diversification is considered to be the best reason for owning gold according to financial experts. This ensures sound financial management, of not putting all your investment eggs into one basket.
   
• Gold is a sound means for protecting wealth over a long period of time (provided you store it securely).
   
• During a period of civil instability, gold is a way to protect assets, it is portable, easy to hide, and can give you something to hang on to when everything else is lost.

Buy Gold Bullion

1. Decide what type of investment-grade gold bullion you want to buy. The choices are either gold coins, gold bars, or gold jewelery.
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     Historic (pre-1933) gold coins tend to retain the best values, as these have numismatic value in addition to their gold content. Examples of historic gold coins that do not sell at excessive premium over the gold price are the British sovereign, British guinea, Spanish escudo, French 20- and 40- francs, Swiss 20 francs, and American gold Eagles ($10 face value), Half-Eagles ($5 face value), Double Eagles ($20 face value). These generally contain 90% gold content; the British sovereign is a notable exception with 91.66% gold content, or 22-karat.
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     The American Eagle Gold Coin is made from 22-karat gold mined in America. Other gold bullion coins include the Canadian Maple Leaf, the Australian Kangaroo, the South African Krugerrand (which sparked the entire gold coin for investment industry) and the 24-karat Austrian Philharmonic.
   • Gold is also sold in bars that are usually 99.5 to 99.99 percent fine. The popular gold refineries include PAMP, Credit Suisse, Johnson Matthey and Metalor, which will be stamped on the bar.
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     The problem with buying gold jewelery as an investment is that you pay a premium for craftmanship and desirability of the design. By all means consider this if you love the aspect of collecting jewelery because it's beautiful and love that it is gold. Any piece of jewelery 14 karat or less will be below investment quality and any resale for the sake of investing will be impacted by the need to refine the gold. On the other hand, it is possible to pick up antique or vintage gold for very little at estate and similar auctions if the worth is not realized, or people simply don't bid much. Older pieces carry more value due to their less mass-produced craftsmanship too, so this can be a lucrative and enjoyable way to collect gold. If you do this, be sure to know how to find the carat, and how to locate blemishes, etc., that can impact the value.
2. 
   
   
   Choose a weight to buy. Clearly, the greater the weight, the greater the cost and you'll also need to give consideration to storage safety.
   • The American Eagle Gold Coin and the other coins listed in Step 1 are made in four weights: 1 oz., 0.5 oz., 0.25 oz. and 0.10 oz.
   • Gold bullion bars are sold in grams or ounces and include 1-oz., 10-oz. and 100–oz. bars.
3. 
   
   
   Find a source that sells gold bullion. Often the same dealers, brokerage houses and banks sell both coins and bars. When assessing the dealer, see how long they've been in business, whether they're certified with an industry or government body, and what they specialize in. In the United States, the US Mint provides a list of authorized sellers that you can check.
   • See Buy Gold Online for how to buy gold online.
   • Jewelery stores sell gold jewelery but be sure to choose a reputable store with a long time trading, as well as noting the realities involved in "investing" in gold jewelery. Auctions can be another source of gold jewelery but be aware that most auctions will leave all the risk on you to have ascertained the value, blemishes, etc.
4. Ascertain the current market price for gold. Look online or call the source to find out the current market price. After finding a price, verify this price with at least one other reputable source, and preferably with several reputable sources. Point out your price research to a dealer if you are faced with any ridiculous discrepancies in pricing.
5. Buy gold coins or bars at or below the prevailing market price, plus a premium of approximate 1 percent. Most dealers have purchase minimums, charged for shipping and handling, and offer quantity discounts.
   • Get receipts for all purchases and get a confirmation of delivery date before you pay for the gold bullion.
   • If purchasing jewelery, retain all receipts in a safe place. If purchasing at an auction, remember to add on buyer premium and any sales taxes.
6. 
   
   
   Store your gold, preferably in a safety deposit box. This aspect is one of concern because clearly your gold assets are only as safe as your storage. Invest in good quality security mechanisms or pay a company to store it for you.

Buy Gold Futures

1. Open a futures account at a commodity trading firm. Futures allow you to control a higher value of gold than you have in cash.
2. Invest risk capital that you can afford to lose. If the price of gold drops, you could end up owing more than you invested, once commissions are added.
3. Buy a gold futures contract. Each trading unit on COMDEX is equivalent to 100 troy ounces. Electronic trading on the Chicago Board of Trade (e-CBOT) is another way to trade gold. Gold futures is a legally binding agreement for delivery of gold in the future at an agreed upon price. For example, you can buy 100 oz. of gold for a 2-year contract worth $46,600 for as little as 3 percent of the value, or $1,350. The commodity trading firm charges a commission for every trade.
4. Wait for the contract to end and collect your earnings or pay your losses. An investor can exchange a futures position for physical gold, referred to as EFP. However, most investors offset their positions before the contracts mature instead of accepting or delivering physical gold.
5. When you buy a futures contract for a fraction of the cost of the amount of property involved, you are basically betting on a small change in the price of the property. You can make a lot of money buying gold futures if the value of gold goes way up relative to your currency, but if it goes down a little, you can lose everything you invested and possibly more (if your futures contracts do not simply get sold to someone else when you do not have enough money down). This is a way to hedge a risk or speculate, but not in itself a way to build savings.

Buy a Gold Exchange Traded Fund

Use the same broker or online broker you would use to buy a stock or mutual fund to buy shares in a gold exchange traded fund, such as GLD and IAU on the New York Stock Exchange. A gold exchange traded fund is designed to track the price of gold, while maintaining the liquidity of a stock.

• Note that gold exchange traded funds do not give you the ability to physically control the gold. Thus some gold advocates believe this is an inferior way to own the commodity.
• Another disadvantage is that ETFs trade like stocks and you may have to pay a commission to buy and sell on the exchange. Moreover, any capital gains you realize are reported and you will have to pay taxes on them.