MAY 3, 2021
Gold is an excellent long-term hedge, but the first-time buyer may not always know what type of gold to buy. Here’s your quick guide to learning the best gold to buy so you can capture its full advantages and benefits.
Buying gold bullion coins is a tangible way to own investment-grade gold. Not rare coins that come with exorbitant premiums and subjective values, but gold coins manufactured by reputable mints that have the highest quality, purity and liquidity.
Gold coins track the spot price, and the most popular ones can be sold literally almost anywhere in the world. Plus, they’re beautiful!
Gold bars have been a dependable store of value for millennia. Gold bars come in a wide range of weights, making them accessible for all types of investors.
The advantage of gold bars is that they have lower premiums than coins. This is one reason why central banks, exchanges, and institutions buy gold bars. It’s also due to the fact that gold bars are designed for easy storage.
These same advantages are available to small investors, too; buying gold bars gives you the most ounces for your investment, and you can store them in many of the same facilities they do.
At first glance, gold rounds look like gold coins, but the difference is gold rounds are manufactured by private mints, where “coins” are made by government mints.. For that reason gold rounds tend to come with lower premiums, but as long as they have investment grade purity of .999 or higher they will track the price of gold.
Gold rounds have no face value like a sovereign coin, so the mint that manufacturers them is important. Investors should look at quality, purity and liquidity (how easy they are to sell). A reputable mint usually meets these criteria.
What about gold stocks--is that the same as buying gold?
No! An investment in a gold stock is actually investing in a mining company, one that is either looking for precious metals or producing them. These stocks work like common stocks, and come with the normal risks of investing.
More importantly, you don’t own any gold, and can’t get any. You don’t own a physical asset, one you can see and touch, just shares in a company that will hopefully be successful.
For those that want to speculate in mining stocks see this gold stock investing guide, but most investors should start by owning real metal before they invest in miners.
The best type of gold to buy depends on your needs and investment style—each kind of gold comes with its own pros and cons. Here are some topics to consider when choosing your investments.
One of the biggest benefits of gold is how easy it is to liquidate your investment. It is a relatively straightforward process to convert gold to currency when you need to. It is much easier to sell gold than a piece of real estate or a business. In most cases it is not much different than selling some stocks.
One of your biggest decisions will be where to store your gold. It will not only determine how you sell, but how safe and secure your gold is. Most home safes can handle smaller bars and coins. However, for larger amounts of gold, consider professional storage.
Your purchase price of gold will depend on the spot price of gold, and the premium of the specific products you want. Premiums fluctuate regularly based on a particular product’s supply and demand.
Be sure to buy from only reputable dealers. The cheapest price is not necessarily an indication of a better dealer; the best ones will also take the time to educate the investor. This is what Mike Maloney prides himself on and was one of the primary reasons he became a bullion dealer.
Not all companies are equal. Some companies charge higher premiums or processing fees which will increase the overall cost of your gold. Compare rates between companies to see what the market standard is. If a company offers gold at a significantly higher or lower cost than the market value, it could be a scam.
It’s important to understand the difference between the spot price and the premium one pays to purchase gold. The spot price is the current price of gold on global exchanges. The spot price of gold is the same no matter which company or business you choose to buy from. For those buying in other currencies the spot price will be an automatic conversion from the US dollar price to their currency.
The premium includes fees charged by the mints, distributors and dealers. Premiums vary among dealers.
Like many markets gold displays some seasonal patterns. On average, March has been the best month to invest in gold because it tends to have slightly lower prices, though as the article shows other months tend to offer good prices as well.
As a reminder, these are just averages, and they do not promise you will always get lower prices when seasonality says you will. Generally, buying on down days or during corrections will provide a low cost basis over time.
When you’re ready to buy, make sure you find a seller who has a strong history and great customer reviews. Choose to buy with GoldSilver.com. Since 2005, we’ve helped investors with world-class customer service, competitive pricing, and storage solutions that can keep your gold safe and secure.
When you were buying gold, you took your time to find the right company to buy from, and that same amount of care should be made when you decide to sell. Who you sell to matters!
When researching which company you will sell to, look for those that not only offer a strong buyback price, but has a strong reputation for providing smooth transactions.