One of the best ways to invest in gold is by buying gold bullion. It’s a tangible asset and a great store of value. It’s also a great way to protect yourself from rising inflation and a falling dollar. Plus, it does not carry the risks of gold stocks, mutual funds, options or ETFs.
But many people have never bought bullion before. How do you get started? Here are some options for buying gold bullion:
#1 Gold Coins
Probably the most popular options for new investors are buying gold bullion coins. These are basically gold in coin format, minted by the governments of different countries. Bullion coins rise and fall with the price of gold. So for example, you can buy a one ounce coin at today’s spot gold price + a small premium (about 6 – 8%).
The advantage to coins is that they are widely recognized and can be easily sold pretty much anywhere you go so they are highly liquid.
One caution – bullion coins are not the same as rare coins or numismatics. Dealers will sometimes try to talk you into investing in rare coins. But unless you know what you’re doing in that area, it’s probably best to invest in the bullion coins. Popular bullion coins that will be easily recognized (and traded) are the US Eagle, Canadian Maple Leaf and the South African Krugerrand.
You can also buy bullion bars in 1 ounce or above (up to 400 ounces). Gold bars have certain advantages too. They have less of a markup than coins – so you’re getting more gold for your money. Plus if you’re looking to invest a lot of money (build up ounces), you can get higher ounces with bars than with coins. Basically you get more gold for the money with bars overall.
The downside to bars is that when you go to sell the bars back most dealers will insist on having them assayed for purity. So they don’t have the liquidity that coins have. One way to get around this is in your 3rd option below.
#3 Bullion Bars Stored in Vaults
You can buy physical bullion and have it stored in a vault (vs taking home delivery of the metal). Several dealers offer this option when you buy from them. You usually pay a small monthly fee to have “allocated” or “segregated” storage, which means your metals are separate from other accounts. (Unallocated storage means your metals are mixed in with others accounts.)
Allocated storage is a great option if you’re storing a lot of precious metals. The disadvantage is that the gold isn’t right there for you if you need it. However most vault storage options will let you take physical delivery of the metal under certain conditions.
This also has the advantage that when you go to sell the bullion back to the dealer, the chain of command so to speak, has not been broken. They know they sold you the gold. They know you’ve stored it with them, so they don’t usually insist on having it assayed for purity. So it’s easier to sell back to the dealer.
Another advantage to this third option is that there are some dealers that will store your metals in offshore vaults. So if you’re worried about possible gold confiscation in your country, or you just want to keep your investing privacy in place, this is a great options.
So those are 3 ways to invest in physical gold bullion. If you do decide to invest, take your time and educate yourself on what you need and which options are best for you. Then you’ll be in a good position to decide for yourself what suits your personal portfolio.
About the Author:
Thinking about buying gold? Visit How To Buy Gold for an easy step-by-step guide to getting started.
Or visit Buying Gold Bullion for the latest tips and articles on investing in precious metals.