They sometimes say savings accounts are as “secure as the Federal Reserve”, but let me tell you, it’s hard to beat gold. Buying gold and other precious metals is regarded by wise savers as a solution to the west’s economic difficulties. Whilst bank interest rates are at an all-time low, the value of gold goes up all the time.
There are 3 main ways of investing in gold. You can try ETFs or Exchange-Traded Funds; there are gold stocks; and then you can buy gold bullion. Bullion is by far the best bet for beginners.
There are 2 kinds of bullion available: ingots and coinage. I recommend you begin with coins. Coins are simpler to buy and easier to sell than gold bars. On top of that, coins give you a lot greater flexibility when it comes to liquidating your precious metal holdings. For example, if you wanted to sell sixty percent of your gold holdings, it’s more straightforward if you own twelve coins rather than a couple of ingots.
Do not spend a cent before you find the very best price you can. Bullion traders earn their profit from what is technically called “the spread”. The Spread is the profit they make when they buy for less than the market price and sell off for a higher price. This varies but usually depends on the quantity of gold, and the grade of gold for sale. It might also depend on who the seller is.
Stay away from those gold vending machines. They have become common in malls and shopping centers all over the world and are aimed at investors who do not know what they are doing. No seasoned dealer would ever think of sourcing from a vending machine, and you shouldn’t either.
Buying gold medals and coins is your best starting point. Coins made from gold can be separated into two main types: bullion and numismatic coinage. Bullion coins are very often minted only for people who want to invest, but numismatic coins were made as currency and usually have additional value in addition to their metal composition. How much bullion coins are worth is based on how much gold they contain plus a small margin of something like 5 percent to eight percent. This difference is generally referred to the “premium price”. Typical investment gold coins include the British sovereign, American Eagle, Canadian Gold Maple Leaf, Austrian Philharmoniker and British Britannia.
Commemorative coins are usually advertised with the suggestion that their value will rise over time. Sadly, this is usually not the outcome. The seller’s original sale price for commemorative coins is nearly always higher than the gold content. Commemorating events like the 50th Anniversary of KFC or The Centenary of Jimmy Raison’s Hanging rarely adds value to the coin itself. This is the reason almost all experts warn against speculating on commemorative coins.
I would often tell greenhorns to exclusively deal in bullion coins and search for those with the least premium over the spot price of gold quoted online. The 1 oz. Krugerrand from South Africa is the most popular bullion coin there is and almost always trades at the least premium over the basic gold price.
The cheapest location in the world to buy gold coins is Hong Kong. The Central Area of Hong Kong around Queen’s Road is crammed with banks offering gold coins at amounts as little as 0.2% over the premium price. Needless to say, unless you are within walking distance, you would have to factor in air fares to see if a visit would be worthwhile. But if you are going anyway…
Once you know what you are doing, investing in gold can be simple and very lucrative. If you can’t get to Hong Kong, knowing the best place to buy gold is important. Other options include dealing in scrap silver to raise extra money.
