Essential Tips For Investing In Gold

By Alexandra Kerr. May 7th 2016

While gold has always been an option for diversifying your portfolio, investing in the precious metal is a great way to ensure your financial holdings withstand a fluctuating dollar. Learn more about why investing in gold may be a good choice for you, where to invest, and what to expect.

Why Could Gold Be A Good Investment Choice For You?

Because the value of gold is not determined by a national currency, it retains value when the dollar doesn't. Its value is derived from the fact that it is a desirable physical commodity, gold bullion, rather than simply a currency intended to represent a medium of exchange, like the dollar. Spanning several millennium, gold has been used as a means to obtain desired objects or services, whether in the form of coins, bars or unrefined nuggets. While the price for gold does fluctuate, making certain times more conducive to investment than others, gold's independence from the inflation of national currencies has made it a smart choice for many seeking a more secure location to invest their assets.

Gold investment opportunities are divided between gold stocks and gold bullion, which is the actual, physical metal. Investors looking for secure, physical commodities have turned to gold bullion as the answer to a plummeting dollar and suffering stock market. Gold bullion can be purchased from private dealers, or occasionally banks.

Gold Bullion

Bars

When most people think of investing in physical gold, they imagine a gold bar. While this is certainly possible, it is also more expensive, given the amount of gold required, and is potentially less stable. Gold bars are easier to counterfeit than gold coins, and therefore require extra steps to verify their authenticity before being bought or sold. If you wanted to buy or sell gold bars in an emergency, the sale may be delayed due to necessary chemical tests to verify authenticity, and a purchase would be harder to guarantee than 100 percent gold. If you have the financial ability to purchase large amounts of gold bullion, bars are an appropriate choice, but the potential for counterfeiting and delayed sales must be taken into consideration.

Coins

Gold coins are an easy way for average investors hoping to protect their portfolio against inflation to purchase the commodity at a less expensive cost than bars. One-ounce gold coins are incredibly common, and provide a liquid, easily portable hedge against an otherwise unstable economic outlook. While the cost for a gold bullion coin fluctuates with the current gold rate, coins are usually minted in one-ounce, one-half ounce, one-quarter ounce and one-tenth ounce weights. Because of their small size, counterfeiting a gold coin is potentially more expensive than simply buying a real one, making counterfeits rare. This means investors can feel more secure that their gold bullion investment in coins is authentic.

Types Of Coins

Contemporary Gold Coins

Contemporary gold coins are any gold bullion coins currently minted around the world, and are a good option for someone interested in earning profit from gold. Contemporary coins include:

  • United States Eagle
  • United States Buffalo
  • South African Krugerrands
  • Canadian Maple Leafs
  • Australian Kangaroo

Pre-1933 Gold Coins

If you are concerned about gold potentially being confiscated, pre-1933 coins are the perfect choice. Classified as "rare coins," they are exempt from confiscation laws. Pre-1933 coins include:

  • Austrian Corona
  • Mexican 50 Pesos

How To Choose A Gold Dealer Or Firm

Once you have made the decision to purchase gold bullion, selecting where you buy it from becomes a crucial decision. The rise in popularity of purchasing gold bullion has created a surge in gold dealers. Look for these characteristics of a reputable gold dealer before making any purchases or investments:

  • They have been in business for 10 or more years.
  • They offer informative services like weekly newsletters, books, etc. to keep clients up to date on the latest gold trends.
  • They focus on your specific investment portfolio's needs, rather than viewing you simply as a one-time gold buying customer.
  • They have a detailed, professional website, offering current contact information, customer reviews, and informational material on gold, gold investments, etc.
  • They have positive reviews with the Better Business Bureau.
  • They fully disclose their price percentage over the flat gold rate.

Another aspect to look out for when selecting a gold dealer is what exactly you are purchasing from them. While gold stocks, leveraged precious metals accounts, futures and options can all involve gold, they are not the literal purchase of gold. If you wish to buy physical gold bullion, be sure to make this clear with your gold dealer.

If investing in gold seems like a good option for you, consider the various ways you can go about it. Purchasing physical gold commodities, like gold bullion, can be a safe way to fight the negative effects of the dollar's inflation on your assets. Whether you decide to go with bars, contemporary coins or rare pre-1933 coins, you are on your way to diversifying and stabilizing your portfolio with one of the oldest currencies in the world.

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