Gold is magically attractive. Already more then 5000 years we are fascinated and attracted to this shiny noble metal. We buy gold in the shape of jewelry or were using golden coins as a mode of payment. Gold throughout history has been the symbol for abundance & power.
Buying gold nowadays is often done as an investment or as an alternative for saving money. Where savings accounts almost don’t give any interest any more – soon in some countries the interest might be negative – gold is an interesting alternative. An investment in gold helps to spread, what is very important in volatile and insecure times. Gold has proven to always maintain its purchasing power and be quite stable in value, where worldwide currencies & stock markets can vary in value rigorously.
The gold rate has been rising the last 10 years with more then 85% and investing in gold becomes normalized. Partly because of the rise of the internet it’s now possible for small investors and savers to, easily, buy gold online and have it deliverd at home. Or to have the gold stored in a secure safe.
A lot of people haven’t bought gold before and have a certain idea which is based on a variety of objections. How safe is it to buy gold? How do you know that you don’t receive fake gold? Are you considering to buy gold, then the following 5 tips are for you!
Tip 1: Take care that you have physical access to the gold
The most important tip for buying gold is to make sure that you actually are transferred real gold. There are many ways to invest in gold in which the gold only exists on paper and you’d never get a real chunk of gold or golden coin in your hands. Such investments come with risks. A good example of such ‘paper gold’ is gold that can be bought directly from mines in Africa, with a huge discount on the gold rate. Such offers sound often too good to be true, and they are! In a recent research it was shown that since 2015 minimally 50 million has been invested by investors in such type of products. Only a small portion of this money has truly been used to invest in African mines.
An estimated 100 times more gold is traded on paper then there is physically available world wide. Buying gold in a digital form, so through futures and EFT’s, is accessible and simple. It however does NOT give you the right to physical gold. Such investors are more suitable to speculate on a rising gold rate, while not suitable to protect your capital.
Always buy gold from a trustworthy supplier that delivers physical gold. The reliability can be checked by the reputation of the supplier. Big suppliers often have a lot of recent reviews of customers online with high scores. Being able to directly deliver from stock is a sign of reliability. A long term of delivery is uncommon.
When buying for athe first time, you could of course also choose to directly pick up your older at the supplier. And pay there.
Tip 2: Choose well known coins or bars
When you’ve made the decision to invcest in gold, you’ll find there’s a lot of different coins and bars available from different weight and composition. What is a good choice? Depending on your budget you should choose between golden coins or gold bars.
Investors with a big budget often choose for gold bars, because the extra costs of these are low. They buy bars of 1kg of pure gold, worth close to 4 million INR. A disadvantage is that when you want to sell, you can sell it by the kilo. You can’t saw a tiny piece of the gold bar.
A more practical alternative are golden coins, which are specially made as an investment coin and are not a valid currency. The most famous coins are the golden Krugerrand and the golden Maple Leaf. These coins are sold with only a little bit of commission and are so liquid that it will be easy to sell them again.
Whatever you choose, make sure you know beforehand the prices for buying and selling. This way there will be no unpleasant surprises when you try to sell the gold.
Tip 3: Don’t check the gold rate too often
The gold rate is moving every day and can swing a lot. It can be very tempting to sell the moment that the gold price is very high, to make profit. Remember that buying gold is a rational consideration, based on protecting purchasing power en to save money and capital. So the tip is to not check the gold price to often, and develop a long term vision.
Keep the gold in your possession for a longer term. Especially when you’ve bought physical gold, there are some extra costs involved. These don’t fit the short term point of view of selling when the rate is rising and buying when it’s decreasing.
The gold price can be really volatile and is not easily predicted. The gold price raised with about 8% when it became clear that Donald Trump won elections in 2016. Several months later, the goldprice had returned back to the level of before the elections.
Would you like to ‘time’ your purchase? Consider to buy the gold in phases: by investing a part of your budget in gold every two/three mnonths, you can average the purchase price over a longer period of time.
Buying gold should be viewed as a rational long term choice. Common advice is to invest a maximum of 5 or 10% of your portfolio in gold.
Tip 4: Store It Safe!
After buying gold, the next challenge is to find the right place to store the gold. Private individuals often choose to store their gold at home. This is perfectly fine, especially when the value is not too high. If the investment is too big for you to be comfortable with this, specialized companies exist for storage.
Partly gold is bought to keep capital outside of the financial world. Because of this, it’s not recommended to store your gold at a bank. Certainly you took money from your bank account because you don’t want to depend on banks, currency, etc. In the past there have been plenty of bail outs and bail ins of banks. Therefore it is not recommended to store at the bank.
Tip 5: Keep Your Gold Secret
The less people know that you own gold, the safer it is. It seems obvious, but it can be very tempting to share with other people that you own gold. Especially if these other people are also getting interested in gold because of the rising gold rate.
When the bitcoin hype was beginning of 2018, a lot of people shared they invested in bitcoins and other crypto currencies. People that actually got rich from it were wisely silent. The risk of your gold being stolen of course increases when you share that you buy gold. Be safe & wealthy!