If you’re a gold investor, you probably want to find the most cost effective means possible of investing in gold. Gold products often have premiums attached to them, that my cut into your profit margin when it’s time to sell. Reducing your initial outlay for your gold investment will help boost your profit and make buying gold a better investment for you.
In recent years, the benefits of investing in gold have become increasingly apparent as nearly every other segment of the world economy has declined. Stocks, bonds, real estate — all are struggling while gold has steadily and consistently gained.
There’s a historical reason for this. In times of economic trouble, gold tends to do well. People see gold as a safe harbor investment because of its long association with wealth and commerce. After all, some of the very first currencies were in gold, and gold has long been accepted around the world as a universal means of trade and commerce. When just about everything else loses its value, gold remains rock-solid.
When buying gold, there are a few factors investors should consider to ensure that they get their gold at an attractive price.
— What kind of gold to buy? Bullion bars and coins tend to be the cheapest types of gold to buy. Numismatic coins and elaborately decorated bars and jewelry tend to have a higher market, so if you’re buying purely for investment and speculative purposes, plain is the way to go. However, numismatic coins may have added value linked to their scarcity or age. Sometimes sellers don’t realize the true value of these coins, and sell them for less than their actually work. Investors knowledgeable about these types of coins may be able to obtain a bargain price.
– How much to buy? When you buy gold, the best way to get it cheaply is to buy in bulk. Gold sellers charge a premium above the underlying value of the gold metal being sold for their products. The more gold you buy, the lower this premium tends to be, so it pays to make bulk purchases of gold products instead of buying them piecemeal.
– Who to buy from? If you’re seeking to buy bullion or gold bars, it’s best to buy them directly from the mint that issues them. Dealers will have a higher mark up on the gold products than mints.
– Storage and insurance costs. Where are you going to put all that gold? And what are you going to do if it’s stolen? When buying gold you will need to factor in your costs of storing the gold and insuring it against loss. For some investors, a more practical solution may be to buy a gold certificate, or gold stock from a bank. The bank will give you a voucher that gives you legal title to gold stored in the bank, freeing you from the responsibility of storing and insuring it.