Apr 07 2009
How to Buy Gold
It may sound like a no brainer when people say, “How should I buy gold.” But it isn’t as easy as it sounds. What is the best way to invest in gold? There are several options to buying gold, including bars, nuggets, jewelry, dust and coins. Many of these ways are safe, others involve some risk.
All gold should be purchased from a reputable coin shop if possible, though gold coins are easily discernible. Consider what recently happened to a woman in Florida who bought a gold bar where the “gold” flaked off of it shortly afterward. If you do choose to buy from another person, listen to your instincts about the transactions. While going through the transaction, ask yourself if you are comfortable with the situation. If you are not, then don’t do the transaction. Listen to your instincts.
The other reason I encourage you to do business in a reputable coin shop is that you are safer. Consider how much danger you are in if you are transact a buy on gold for instance in a restaurant, then get robbed at gunpoint shortly after you walk out to your car. Be sure that the people you do business with are safe. A reputable coin shop is a much safer situation.
There are gold bars that can be purchased, though they are not commonplace. Because they are not in great demand, they do not command a premium. They are hard to come by, and probably not the best way to add gold into your portfolio unless you just want physical gold. One man told me that a gold coin is something that anyone can recognize when transacting business. A gold bar can be easily be made up to look like gold. But a gold coin, Brilliant, uncirculated has a luster and feel all of its own. In a time of extreme financial hardship, gold will hold its value.
Gold jewelry should never be bought as an investment, at least here in America. There are other countries where gold links of a necklace are bought by people as investments in their wealth. However, here in the United States there is a hyper mark up on jewelry of all kinds: rings, necklaces and the like will only return the grams that are used when selling them. For example, I recently found a couple of old rings in a box, and took them to sell as scrap. I only got about $48 for them, and the one, I’m sure, commanded over $200 when new.
Gold nuggets do command a premium in certain stores because they are rare. Be careful not to purchase them because fool’s gold is easily fooling. However, if you like mining for the yellow metal, you might find that turning it into cash is surprisingly delightful as nuggets are unusual, and therefore worth the hunt. That said, do not just go digging on anyone’s property without permission, and know what you are getting into. Thank your lucky stars you don’t have to go over the Chilkoot Pass to get the gold!
Liberty coins are best, though Kugerands and Loonies will work. Keep them in hard cases, as they will command less money if they have any blemishes on them. Gold is soft, so they blemish easily. The better they look, the more premium you can get. Unless you are really into rare coins, do not buy them because they are time consuming to follow and do not always return on your investment if their demand changes. Stick with just regular Liberty coins.
If you chose to begin buying gold, now is the time to do it. As inflation rises, so will the price of gold, but expect it to be volatile. You need to put it in your box and check the price on Kitco.com weekly rather than daily.
