More tips to buy gold

Gold is a great investment option, more so now. The U.S. economy is yet to recover from the over $1.4 trillion deficit, which in turn has turned the American dollar feeble. Since the dollar is the dominating currency, many people the world over are turning to gold as a hedge against economic uncertainty. Gold can well be the only constant when stock portfolios implode.

eye of a girl with gold color hair

The best time to buy gold is when current market prices have depreciated a bit. However, there are various other factors that come into play if you want to purchase gold at slightly lower rates. These are:

  • Opt for gold coins or bullion that is available at a maximum premium of 8 percent: Do not pay too much for the gold you want. The average price of gold over the years has been $400 an ounce, adjusted for inflation. When there is economic turmoil, the price of gold shoots up, leading to a bubble that won’t last when the economy improves over time. When this happens, gold rates will go back to the pre-bubble range. It is recommended that you not purchase gold that is only being offered well above an 8 percent premium over the current spot price for an ounce.
  • Choose certified dealers who outline purchase minimums, but also offer discounts on higher volumes of gold, and/or free or cheap handling and shipping charges.
  • Many people believe high profile gold firms or companies that advertise heavily are good choices. This is not always the case. Advertising campaigns are expensive, due to which their costs are included in the rates investors have to pay for coin or bullion. These markup rates can be as high as twice the real value of the gold.
  • When choosing gold coins, go for the bullion varieties rather than collectibles. Collectible coins, although sometimes profitable for selling purposes, are not recommended if you don’t have adequate knowledge about evaluating and grading them.
  • Gold of a lower value may be more affordable at the outset, but it trades less often. This means you will only end up paying a higher premium for the in the long run.

Note: Ensure that you buy gold only from established dealers, banks, and other institutions that offer a reliable guarantee of purity, weight, and content. You can also try online auction sites like eBay if you have in-depth knowledge about ascertaining the purity of a gold item and separating the wheat from the chaff.

How to invest in gold ?

Gold is considered to be one of the safest investments in times of economic turbulence. Despite being a commodity that has its share of volatile price fluctuations in the short-term, its remarkable long-term returns make it a favorite among investors.
What is the best way to invest in gold? While there is no concrete answer to this question, there are a bevy of options investors can choose from.

physical gold bullion

Gold bullion and coins

Bullion and minted coins represent pure, tangible value and are the investment of choice for many. Direct ownership of gold coins in particular is desirable because of their easy storage, portability and aesthetic value, due to which many investors are willing to pay a premium for them.
Gold bars can be purchased through bullion dealers, but since doing so isn’t always easy, investors can choose gold certificate schemes that are offered by several organizations. These schemes allow for investments in bullion without worrying about the storage aspect since the bars are stocked in secure vaults. A certificate of deposit is handed over to the investor when he/she purchases the gold.

Exchange Traded Commodities (ETCs)

ETCs are inert investments that track the commodities sector. If you opt for a gold ETC, the worth of your investment in the yellow metal will be proportional to the rise and fall in gold prices. ETCs also give investors two options:  to leverage their savings, or bet against a rise in gold prices.

Shares and mutual funds

Gold shares and mutual funds are a feasible option for those wary of investing in physical gold. These consist of the stock portfolios of gold mining companies. It is always advisable to invest in mutual funds or shares of well-established mining companies rather than go for cheap stocks of relatively younger firms.

The above mentioned gold investment instruments are just a few in the pick of many. Gold Accumulation Plans (GAPs), gold orientated funds, and other choices may be more to your liking. You must ideally consult your financial advisor before making any investment.