When you decide to buy gold bullion as an enriching hedge in your portfolio, a few things need your attention.
- An understanding of how bullion investing works.
- What shapes and sizes gold bullion holds.
- How to choose your gold dealer.
- Become familiar with the bullion pricing system.
- The right time to buy gold bullion.
- Your storage options.
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How bullion investing work
The concept of bullion gold investing is simple. You choose the product carefully and close the deal. The gold remains stored until the right time when reselling insures a profit. How much profit you make depends on mastering the above steps. In short, profit will depend on the right product and timing of the sale.
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When you buy gold bullion, know the different kinds.
There are three basic manifestations of gold bullion:
Perhaps the most flexible option for buyers, gold bullion bars trade easily. They come in standard sizes and purities and remains widely accepted as the favourite investment type. Not everybody wants to buy a gold coin when they want to purchase this precious metal in bulk. But gold bars will always sell more easily.
Another plus point is the bigger the bar, the more profit you will gain in the end. Any gold is bought per ounce and here is where “spot price premiums” can lower your profit. Spot price is the market value any commodity currently sells for. The premium consists of an added fee for doing business with the gold trader. If you buy fewer ounces at the same fee for more, the profit margin would be a lot less. Even so, there are one ounce bars available and this allows anyone with some savings to obtain gold bars.
Gold bullion coins are not always the best choice for beginner investors. They remain an attractive lure, though. Their prices can go well and above the actual gold value because of scarcity and demand. However, the world of coins – especially for those who buy gold bullion – is full of sharks. That is why the more experienced client will tread more safely; they can see through scams and fake gold. This does not necessarily mean you must wait for more experience if gold coins is your particular passion. Do your homework. Be patient and choose your dealer or gold company with the utmost care.
At first glance, a round resembles a gold coin. The difference is big. Rounds are not legal tender. Nor do they have a face value. Purity and weight determines the price of a round. It is certainly a viable investment choice but rounds’ worth can sometimes be difficult to gauge. This is an unnecessary hassle many buyers do not want. Rounds bought from reputable sources have a known value. But certain ones hold a mere layer of gold and this makes a correct valuation extremely difficult. Needless to say, it can also be a profit killer when you buy rounds for more than they are worth.
The person or company you buy gold bullion from is no different to any other kind of gold retailer. Sure, the products may differ but they all need to have one trait that is not negotiable. They must be trustworthy. But how exactly, between all the promises and good-looking web sites, do you find the genuine article?
Shop around, draw up a list of retailers and then see how many of the following points they comply with. The more, the better.
- Do they make everything easy to understand or frustrate with gold-speak jargon that is not necessary?
- Are customer reviews positive? Do not rely on the seller’s page reviews alone. Go to independent business review sites and precious metals forums.
- Is there a fair buy back policy?
- Do they have an easy payment and delivery option? Do they use registered mail?
- Is there an option to speak to a consultant directly if you have queries or complaints?
- Are they paperwork free?
- Do they have insurance, guarantees and fraud policies?
- Are the prices clearly marked on the website?
- Do they allow you to make a choice in peace? Pushy sellers is a huge warning sign.
- Do they really offer what they advertise? Many shady dealers will offer gold bullion coins but then try to sell only those of historical value. Such coins are not bullion. Their only worth stems from the metal it yields when melted. Unsuspecting buyers usually buy these coins and pay too much.
How Bullion Pricing Works
Once again, it is all about that pesky spot price and the handling premiums. Whether it is bullion bars, coins or rounds, it boils down to the same thing. Buy at the best possible time and let go of your treasure at the best possible time.
Smart investors buy when the price of gold is low. Then they hang onto the precious metal until it is in demand and the market is hungry for gold. When the price of gold bullion rises, the owner sells and nets a neat profit. It is somewhat more complex, though. Markets and demand can change their attitude towards gold on a daily basis.
Buy Gold Bullion – Get Started
Usually, private individuals cannot enter the bullion market themselves. Authentic companies will help you obtain your gold physically. They will also help you to sell it and handle the sale details. A professional retailer will also have their finger on the pulse of the gold market. This way, as a member of a bullion company, you can stay informed about gold trends.
It is already a learning curve for beginners, just to find a good dealer and buy gold bullion. Storing your gold, is the second half of the story. How you store gold can turn your investment into a fairy tale or nightmare.
When it comes to owning gold, the safest thing you can do is to take physical ownership. Bought gold but received an ownership certificate or some other deed from the bank? If that bank folds, the paperwork means squat. But keeping physical gold comes with its own unique risks, such as accidental loss or a burglary.
Here Are The Safest Options
After you purchase the gold bullion, you have two basic choices. Squirrel the precious metal away somewhere in your home or hire space with a storage facility. Both have drawbacks and benefits. It remains entirely up to you which option is best but let’s review those good and bad points first.
Keeping Gold At Home
This course of action has the best returns if you are hardwired for profit. After you buy gold bullion and pay all the fees, you can store it for free at home. Many investors do this. However, the risk of theft is always present. There are some basic rules to follow that should keep your golden investment safe.
- Decide before you buy any gold where you intend to store it. Inadequate storage happen most often when buyers do not make preparations beforehand.
- Do not use a clearly visible home safe. It is a screaming sign during a home invasion where to find the family’s valuables.
- Do not use a cheap safe. If your home does not already have an excellent vault, research a company that will provide you with one. It may be an extra expense, but it is once off. A safe is also what stands between a failed robbery or a total loss of thousands of dollars.
- Do not be obvious about your gold ownership. Be discreet about who you tell about the precious metals in your home.
- There are people who divide their stash and keep it in different locations throughout the home. This is a very prudent move. It prevents somebody with sticky fingers from finding everything.
Using a Storage Company
Using a storage company, one that effectively protect precious metals, can provide benefits. Two of the best include peace of mind and not having to bother about putting in a new safe. That being said, the storage company is a business and as such will charge a holding fee.
Most will require repeated payments, depending if they have monthly or annual fees. Considering that bullion is about profit, this is a huge drawback. You will keep spending money as long as someone else safeguards the gold on your behalf.
The arena that allows you to buy gold bullion can be very rewarding. Always use common sense, patience and research to enjoy stacking this great precious metal.