When purchasing gold, there are a myriad of pitfalls to stay clear of before investing your hard-earned money. I’ve put together a list of the top ten gold investment strategies for investors who are new to the market and are looking to get the best worth for their money Auctus Metal Portfolios.
1.) The first, and what I consider to be the most important thing to do prior to purchasing your gold, is to research. This may sound obvious, however, there are many novice investors who are excited about purchasing gold and settle for the first option they can find on the internet. Be sure to do your homework prior to buying as the purchase could be costly if fail to make the right decision.
2.) Don’t buy numismatic gold coins unless you’re an avid collector. Numismatic coins are collector’s items and carry a significant cost over the spot value of gold. Numismatics can include very scarce coins, coins that are graded, shipwreck coins, and so on. Keep in mind that you are investing in the commodity (gold) therefore you need the highest amount of gold for your amount of money.
3.) Buy only bullion coins as well as bullion bars. Gold bullion is essentially gold that is made in large quantities. It is 99.9 percent pure gold. It is available as coins that are minted by the government round, ingots, and bars. Purchase gold bullion as the price premium it charges over the spot price is low. For instance, the price of gold today is around $1100/ounce. If you were to purchase an numismatic gold coin, it could cost between $1500 to $100,000 for a single coin. A bullion coin such as that of the American Gold Eagle might be $35 more than the price of spot. A much better deal.
4.) Examine the various gold bullion items. Most gold bullion products produced by government mints such as Perth, Australia mint or the Perth, Australia mint or U.S. mint carry a greater value over gold round. Gold rounds aren’t considered coins since they aren’t legal tender. They don’t carry a value on them , like the U.S. gold coin does. They are generally cheaper to purchase.
5.) Avoid fool’s gold. The term “fools gold” is that is used by many to refer to Gold ETFs (Exchange Traded Funds). GLD is one of these funds which you can invest in by your broker. The issue of these funds is they don’t actually have the gold you are investing in. They are derivatives, so you only have exposure to gold’s price. The GLD is generally believed to not possess the gold they claim to have, because they do not permit an audit by a third party of the gold stored.
6.) Be wary of gold futures contracts that are traded through the COMEX (Commodities Exchange). These are basically futures contracts that allow you to purchase 100 ounces of silver for each contract. If the date for the future arrives and the price of gold is higher you earn a profit. The COMEX is also scrutinized for allegedly defaulting on the delivery of gold to customers. Some are even claiming that COMEX is using cash settlements instead of physical delivery. COMEX uses cash settlements instead of physical delivery of the gold to their customers. Technically, this is regarded as an error.
7.) diversify your assets. Like any investment portfolio, you should purchase different types of gold. Don’t put all of your cash into American Gold Eagles. It’s good to diversify your portfolio because you don’t know which coins could have a higher value when you decide to sell them.
8) Purchase different denominations of gold coins. You can buy most the gold coin in one tenth of an ounces quarter ounce, 1/2 an ounce, or 1 ounce. Certain coins are also available in larger quantities of 10 oz or more. It is important to keep in mind that smaller coins have an increased cost due because it required more time and energy to create.
9.) Beware of placing your gold in banks’ lock boxes. It is more secure to store your gold in a safe place that no one else is aware of rather than rely on the fact that the bank will allow you to take your gold in the case of a bank crash. Another option is a robust safe that is secured into the earth.
10.) Do not reveal to anyone that you’re making a bet on gold. If the time comes when the price of gold goes up and experts predict will occur sooner or later, you must ensure that your investment remains hidden to potential thieves.
This is not an exhaustive guide to investing in gold however it could be helpful in the beginning of your journey to gold investment.