Gold is not coveted just because of its ornamental value, no, it goes way beyond that. This precious metal has always and most likely will always be considered a great investment option. This is because of how stable it has proven to be even against the most turbulent economic and political instability.
If you are considering this investment path, then our guess is you have been on so many sites finding out all you can about buying this metal. You most likely are concerned with where to buy from and you have read reviews just like this review about so many gold companies.
Your research should not stop there. You need to be well-informed about what you are doing to make sure that you do not get swindled in your efforts to invest in this precious metal.
Purchasing gold bullion is not always easy. But if you know the important things which will be discussed in this article, the chances of you getting swindled will be significantly reduced.
1. Purity
Because you are buying the metal for investment purposes, it should be nothing less than 99.5 percent pure. This is because bars cannot be 100 percent pure since other metals like copper and silver are used in their production. Also, the bar you buy for investment should have its manufacturer name, purity, and weight on its surface.
2. Ensure You Buy Workable Sizes
Eventually, you would have to sell off your bullion. If you buy an extremely large bar, you may have trouble selling it off when you want to. Instead of doing this, you should purchase smaller sizes.
For example, let us say you have 16,000 dollars and the price for an ounce of gold is 1,600 dollars, your money will get you ten ounces of gold. Buying workable sizes will be buying 10 1-ounce bars rather than one big 10-ounce bar.
If you buy the smaller bars, you can easily sell one bar whenever the need arises. Also, finding a buyer for the smaller bars will be easier than finding a buyer for the big bar.
3. Know the Spot Price
As an investor looking to invest in this precious metal, you need to be conversant with the spot price of the asset to ensure you get the best deal.
The spot price most likely will not be the same as what sellers will offer as the price varies from one seller to the other. Some of the factors that influence the price include the seller’s profit margin, payment processing charges, handling, and shipping fees, and other additional costs.
To get the best deal, you simply need to shop around and then find out the seller offering you the best deal. Knowing the spot price will help you know which seller has a fair price.
You can also avoid scams with this knowledge. If a seller’s price is below the spot price, then the chances that they are simply attracting you with the low price to scam you are high. Luckily, you can find the spot price of this asset easily on financial websites.
4. Gold Bars vs. Coins
You may set out to buy gold bullion but along the line decide to consider other alternatives. One of the many other options that may be presented to you is gold coins.
While pure gold in any form has significant value, not every form is great for investment. As an investor looking to invest in the physical form of this asset so that it can track the gold price, you would be better off avoiding coins.
Often, these coins’ numismatic value and attractive designs are what make them valuable. Sometimes, they do not contain enough gold percent, yet, because of their numismatic worth, they can be costlier.
Apart from costing more, sometimes, these coins can tilt the worth of your investment portfolio. For instance, the U.S Mint produced American Eagle coin has just 91.67 percent of gold. But because it is a collector’s item, its value is more than bars. However, bars are the best to hold over long terms, and converting them to cash is a lot easier. Therefore, while some investors may wish to get collector’s items in their portfolio, bars are the most common choice for people who seek this asset due to their safe-haven value.
5. Consider Alternatives
Holding physical gold is great and comes with several benefits, especially for those who love tangible assets. However, there are other risks and disadvantages to this investment approach.
One of the major risks is that the asset can be stolen, especially if it is kept at home. As for the disadvantages, a major disadvantage is that you will not get any interest or dividends from your investments. You would only get profits if the asset’s price has appreciated at the time you want to sell it.
There are, however, other alternatives to investing in gold. Although you will not have the physical asset, you would have some of the numerous benefits a physical gold investment would have otherwise offered and more.
Some of the alternatives to holding this asset in its physical form are:
- Mining Stocks: This involves buying stocks in companies that mine this precious metal. With this, you get to benefit in two ways. If the asset’s price increases, your stock does too; the company’s success will also influence your stocks.
- Gold-Based ETFs: Gold-based ETFs track the price of this asset. When you invest in this alternative, your funds will perform the same way the asset does. However, one benefit this has over physical gold bars is that converting them to cash is easier.
- Futures: This allows investors to speculate on the price of this asset. The major advantage this has over other alternatives is that an investor can own several futures with a relatively little amount of money. Therefore, if your futures move the way you think they would, you could make plenty of money quickly. Visit https://www.thebalance.com/ to learn more about the concept of futures.
Conclusion
Investing in gold bullion typically is a great investment path. But if the things discussed in this article are not carefully considered, an investor may make some mistakes when buying this precious metal. Also, if owing the tangible asset is not important to you, you may benefit more from investing in the other alternatives discussed above.