When you see or hear the word ‘investment’, the mind automatically turns to stocks, bonds, and people in suits trying to guess the motions of the market. Unfortunately, there are some key problems with investing in this way and we’ve already highlighted one of them by suggesting that finance experts ‘guess’. Sure, they analyze trends and use their experience and knowledge to suggest what this means but it can never be 100% accurate.
Regardless of the ability of these experts, there’s another problem with investing in stocks and the like; the flailing economy. Ever since 2008/2009 and the depression that shook the whole world, there’s been a distinct lack of trust for our economy’s ability. During this time, millions of people lost money and it caused them to turn to other investment opportunities and there’s one that stands above the rest; gold. However, most people don’t know how to buy gold for investment and this leads nicely to our superb guide!
Buying Gold for Investment
In truth, you have several options when looking to invest in gold and this is another reason why it’s so attractive. If you aren’t interested in trading or hiring a service to do the trading on your behalf, the easiest method of investing in gold would be to buy physical gold bullion. Although this sounds like something we shouldn’t be able to do on a whim, it really is simple these days with services selling it online.
Depending on your needs and the amount of money you have to invest, you’ll be able to choose between different sized bars, ingots, and coins. In North America, the Bank of Nova Scotia (and its Scotia division) is up there with the largest bullion dealers.
As you may have guessed, there’s one huge problem with choosing this option and it comes from the required storage and insurance you’ll need to buy. When buying physical gold, you quite literally get physical gold so you’re going to need somewhere to keep it. Thereafter, it needs to be protected against theft and this leads to insurance costs. As long as you’re willing to go through this process, it remains as a solid option.
Shortened from exchange-traded funds, there are several ETFs that have gold as the main product; in fact, the most recent count tallies 33 specialized gold ETFs. Compared to 2010, when this same figure was just 16, the number of available gold ETFs is increasing all the time and this perhaps suggests the trends and behaviors of investors today.
Rather than holding the gold yourself and being responsible for its security, ETFs allow you to invest in others who hold the precious metal. After investing in the ETF, you benefit as the price of gold increases without having to hold it personally. Normally, the ETF will track bonds or an index but we’re concentrating on how to buy gold for investment.
Although we’ve already covered the topic of physical gold, we should mention gold coins because these are easier to obtain in the US than many other countries. With the American Eagle, weighing just one ounce, you can invest in gold but in a more efficient manner. In recent years, millions of American Eagle coins have been sold and it shows the willingness of investors to expand their portfolio.
If you choose this route, you’ll need to purchase the coin(s) through an authorized dealer. Nowadays, this includes several coin dealers, wholesalers, precious metal companies, and brokerage services. Once you own the metal, you can enjoy the security of gold’s prices both now and long into the future.
As our final foray into the physical gold niche, jewelry is still the most popular method of holding gold despite the
improvements we’ve seen in ETFs and some of the other options we’ve got here today. In total, over half of all demand for gold comes from jewelry. Of course, you’ll need to understand the karat amounts when investing in jewelry (or at least use a finance professional who can help in this regard!).
Depending on the karat amount of the metal, this will impact on its value as well as its durability so it’s important to make the right decisions. When buying from a retailer, you’re well within your rights to ask for a certificate of authenticity and this ensures you’re buying the real thing. Sadly, there are scammers out there trying to make a buck so caution pays when buying gold.
Compared to other forms of gold investment, jewelry doesn’t exactly work for short-term investments so you definitely need to buy with the aim of wearing it. If you buy gold jewelry and try to sell it just hours later, you aren’t going to get a price anywhere near the purchasing price and this is how jewelry works; the buyer needs to make a
profit. If you have long-term plans, it’ll recapture its value and be worth the investment.
For the most part, people tend to choose ETFs over closed-end funds because the fees for the latter are a couple of percentage points higher. This being said, the funds will normally be traded at discounted levels so they can be extremely profitable if you believe the price of gold is just about to take a sharp rise.
Finally, we have an option you may not know existed and it provides you with an opportunity to invest your retirement money into a gold individual retirement account. With the problems we said that existed with investing in the economy, choosing gold for your retirement money could be the best decision you make this year. During the global collapse not so long ago, nearly $2.5 trillion was lost from IRAs and 401(k) accounts alone.
As long as you choose the right provider, they’ll talk you through the process and you can transfer or rollover your retirement money into a gold IRA. Over time, it’ll gain value and you can enjoy not having to worry about the economy for once.
Investing in Gold
When people ask the question of how to buy gold for investment, they tend to listen to the advice of their friends, family, and strangers on the internet. While this can be beneficial to gauge opinions, you should always base your decision on your own needs. If you can talk with a finance professional, they’ll be able to give you advice as to what suits your position right now.
With gold IRAs, for example, they provide the perfect opportunity to combine investing and planning for your retirement. At the same time, you’re taking advantage of gold and everything it has to offer in the short- and long-term. Rather than worrying about the price of the dollar all the time, you can be confident in the knowledge that the price of gold has been steadily increasing for centuries!
I hope you enjoyed this post and if you have any questions about best rollover IRA company or want to leave your own personal experience, leave a comment below.
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