Gold is a finite resource, making it a valuable commodity, and its value has held up over time. Unlike fiat currency, the value of gold is not determined by a government or central bank, but by market demand. This means that, even during times of economic uncertainty, the value of gold is less likely to be affected. Click to view gold price history.
Gold–and other precious metals like platinum and silver–tend to hold their value better than most paper currencies. Economists debate on the precise reason why that is, but many say it’s because precious metals have an intrinsic value that paper currency doesn’t.
Aside from their use as jewelry and decorative items, many precious metals have industrial applications, too. That means there’s almost always a market full of people ready to buy.
For the right investor, buying physical gold coins, gold bars and gold bullion can represent a huge opportunity to grow personal wealth. It takes some market savvy, however, to understand how to follow the market and get the biggest return.
Ready to get started? Here’s the best way to buy gold and other precious metals.
1. Get Your Timing Right
The best way to buy gold is to time your purchase carefully. Not only do you need to pay attention to national and global economic trends, the time of year you buy matters, too.
Historically, March is the best time to buy gold. Prices are generally at their lowest point of the year, so the value of your purchase will only increase over the coming months.
2. Pay Attention to Politics
Political events have a huge impact the price of gold.
Things like presidential elections, legislative agendas, and appointing a new U.S. Federal Reserve chief can all impact the price of precious metals–for better or worse.
Since the tide of politics can change quickly, you need to stay updated on what’s going on in Washington and abroad.
In general, moments that encourage uncertainty in the economy can drive up the price of gold. Political unrest–even on the global scale–can also increase prices. As more citizens seek out a stable investment like gold, silver, or platinum, their worth jumps up dramatically.
That means the best time to buy is when the economy is stable and the world is relatively calm.
It is also important to consider the purity of the gold being purchased, as well as the reputation of the manufacturer. The purity of gold is measured in karats, with 24-karat gold being the purest form. The higher the karat, the higher the gold content and the more valuable the investment. It is recommended to purchase gold that is at least 22 karats, as this is considered a high-quality investment.
4. Invest in the Right Format
Investing in physical gold offers several advantages over investing in other forms of gold, such as exchange-traded funds (ETFs) or gold mining stocks. Physical gold is tangible and can be stored, making it a more secure investment than ETFs or stocks, which are subject to market fluctuations. Additionally, physical gold is not subject to counterparty risk, meaning there is no risk of default by a third party.
When investing in physical gold, it is important to consider the form in which to invest. The most common forms of physical gold are coins and bars, with coins being the preferred option for smaller investments and bars for larger investments. Coins are also more liquid than bars and are easier to sell, making them a more convenient option for investors who may want to sell their gold quickly.
4. Coins and Jewelry
Local pawn shops and gold stores mostly deal in coins and jewelry. While you have the advantage of being able to see each piece before you buy, you may have to take the dealer’s word on it when it comes to purity.
Futures are legal contracts where a seller agrees to provide you with the precious metal of your choice at a specific price sometime in the future.
Futures are a particularly risky way to invest in gold. That’s because you’re at the mercy of the market. If you underestimate the future price of gold, you could be facing a hefty price tag when your future comes due.
You can purchase gold and silver in bars, or bullion. Bullion is a pure form of metal, making it a high-value purchase.
Since the overall market is based on bullion, some say this is the best way to buy gold.
If you’re looking to buy bullion, keep in mind that you’ll need a place to store it. Some gold dealerships can offer solutions to store them for you. Otherwise, you’ll need to invest in a large safety deposit box at your local bank or find another security solution.
7. Gold Mining Companies
If you’re willing to tangle with the stock market, consider investing in stock from gold mining companies. Since these organizations are directly tied to the gold market, their worth tends to follow gold prices.
Stocks are generally a risky investment, however. If you’re a novice and don’t have the assistance of an experienced broker, it may be best to invest in physical gold, instead.
9. Choose an Online or Local Shop
If you’ve decided to invest in physical gold, it’s time to decide if you want to make purchases in person or from the comfort of your home computer. Each option has its own advantages.
When you choose a local gold dealership to buy from, you can see their stock up close before you buy. If you’re good at picking out a good investment by eye, this could be a real advantage for your purchase. It is important to purchase from a reputable dealer. This will ensure that the gold is authentic and that the price being paid is fair.
However, for many investors, purchasing online is the best way to buy gold. That’s because online sellers generally move much more products than your local dealership. Not only do online shops offer a bigger selection of products, but they can also generally afford to sell their goods at a lower price.
Many online shops also offer free shipping for their purchases, giving you an even bigger chance to save money on your buy.
Most importantly, since online shops operate at such a high volume, they’re usually more likely to carry quality products. That’s because their business depends on maintaining a good reputation among their buyers.
If you have your heart set on buying bullion, you’ll probably need to make your purchase online. Most local shops don’t stock bulky bars.