How to Buy Gold Guide
With current popularity of gold as an investment a lot of potential buyers have many different questions. This website is an ultimate guide for everyone interested to buy gold or buy silver. Just to be clear, you will not be able to buy gold or silver here but you will know everything there is to know to make smart investment decision. To buy silver or gold is extremely simple but if done wrong then the outcome can be financially devastating. It is really important to study how and where to buy gold or to buy silver so you deal with trusted and honest sources in trustworthy and reliable purchases. You also have to be aware of companies that don’t keep high ethical standards. Hopefully this guide will help you to avoid all kinds of troubles associated with precious metals dealings.
As history of gold shows – gold is a great storage of value.As a result expanding number of methods allow investors to buy gold or silver in physical possession or just get some exposure to gold or silver price fluctuation. Some of the options are – to buy gold or silver coins and/or bullions, mining stocks, online accounts, exchange traded funds and very complex financial products like gold futures. Which one is right for you is impossible to say, it all depends on what are your goals and how much money you would like to invest. Before you’ll buy gold you should ask yourself these questions:
- Why do you want to buy silver or to buy gold?
- Would you like a real asset available at moment notice or you’d like some exposure to gold price fluctuation?
- When you buy gold – would you like gold stored at home or at bank’s vault?
- Do you know how much overhead will cost you? Fees like commissions, premiums, taxes, storage, insurance and delivery could add up to a decent amount.
General Guideline of Investing in Gold/Silver
Before going into further details I’d like to explain general “do’s and don’ts“. Never buy silver or buy gold from TV ads and don’t make decisions just on current gold news. Advertisements are expensive and someone has to bear the costs, if you’ll buy gold from those companies – that person will be you. It is not uncommon when TV ads sell silver/gold for 3 or 4 times more than market price. They try to sell “limited, rare, collectible” things that were newly minted and in 10 years you’ll have no problem buying these “rarities” in local coin shop for the price of silver.
When you buy gold or silver bullions be aware of its purity, or fineness. This represents the amount of precious metal in coin, bullion or jewelry. The gold by itself is a very soft metal which you could scratch even with your nails. In order for it to be harder some kind of alloy is added. The purest gold is 24 karats or .999 parts per thousand, the other most common grades are 22 karats (92%), 18 karats (75%), 14 karats (58%) and 9 karats (38%). With silver it is much simpler – all silver which is less than 925 is “junk silver” everything more than 925 is sterling silver.
Never buy gold or silver “certificates” nor any other variations of “paper precious metal”, not even if it guaranteed by a government. In theory these certificates should represent gold or silver stored somewhere in vault but in reality there is no way to check it.
Don’t buy silver or gold through major brokerage house which might have a short position in future contracts. They could delay your order with phony “problems” like that they have to talk to manager who is “sick”, “already left” or is “on the meeting” or they might say that markets are closed and you must wait till tomorrow. Instead of good advice you might get a strong pitch to buy one of their EFTs, gold or silver stock or future contracts. And why do you need intermediary between you and your gold at all? All you need to know about investing you can find on this website.
Never buy gold collectible coins for investment purpose. Huge part of the value is in the condition and rarity of a coin and not in the substance of gold or silver. Also if you are investing a large sum of money in collectible coins it will drive the price up and when you’ll sell them the price will be much lower.
Be careful when coin dealer has unreasonably long shipping times. It is not unusual for a coin shop to go bankrupt. Don’t buy more then you can afford to lose in one time. Instead of placing one large order place 5 smaller ones with different dealers, you will lose some money on shipping but your investment will be smarter and safer.
Gold or Silver in Your Own Physical Possession
This is probably the best way how to buy gold or buy silver. With any other method there is always a danger that something might happen to your gold or silver, either “act of god”, theft or intentional misrepresentation of facts by your “agent”. Surely you can buy insurance but unless you read and understand the fine print there is always a chance you’ll never collect. Ideal way of purchasing for your own physical possession would be going to local pawn shop or gold/silver dealer and buy gold for cash. Dealers usually charge premium and if it is more than 7% from spot price – you are not getting a good deal. Feel free to negotiate and if you think that someone will give you better price don’t hesitate to look around. If you buy large quantities of gold or silver try to keep it in safe at home. Try to avoid safety deposit boxes, with current shortages in states budgets it is quite possible that government can “by mistake” confiscate your box for non-payment, even if you always pay on time.
Storing gold or silver at home will cost you nothing but you might misplace it, have it stolen, etc. A way to avoid these problems would be third-party storage.
Gold or Silver in Third-Party Storage
In case you don’t want or can’t store large amount of gold at home then one of your options is to have someone store it for you. It is very important to do serious research about company you plan to trust your gold. First make sure that this company will actually have gold physically stored at it’s facilities. Secondly – you have to check if there are laws or regulations that might apply to your precious metal. As you might know one of the largest and most trusted companies are not located in USA, so it goes a long way to know what are domestic rules and regulations. Thirdly – make sure that your gold or silver is unencumbered. The difference between encumbered and unencumbered is that encumbered gold or silver is subject to counter-party risk, meaning that if the storing company goes bankrupt – your gold goes to creditors. Also if your gold or silver is unencumbered then it is subject to physical delivery at any time and the only risk it is exposed to is performance risk.