Gold has been used as a way to accumulate wealth for thousands of years. It’s beautiful, difficult to mine and won’t rust. The scarcity of gold makes it one of the most coveted commodities in the world. Investors who are just beginning their journey with this popular precious metal may want to follow these five tips.
Purchasing Gold Coins
Throughout the centuries, gold coins have been used as currency due to the rarity of the metal. While each coin may have a specific monetary value stamped on the physical metal when it’s0020minted, the actual weight of the coin, grade and condition should be used to determine its value.
When gold coins are graded by companies like PCGS or NGC, each coin will be examined and given a grade for its visual appeal and rarity. If a coin has a low mintage for a specific year, it makes it rarer and usually increases the value. If a coin has little to no imperfections, it will be graded higher, which also increases the value. Both bullion and proof coins are eligible for grading. Typically, older coins will carry more value than newer coins.
Gold Bar Investments
Another way to invest in gold is by buying physical gold bars. These are usually created to contain .9999 percent pure gold. These investment vehicles are typically produced in a rectangular shape, which makes it easier to store them. They come in various sizes and weights such as 1 ounce, 1/2 ounce, 1/4 ounce or 1/10 ounce. Gold bars will usually sell at a premium price, which means that a gold dealer will add on a few dollars to the actual spot price of gold to make a profit.
Security and Safety
When deciding to purchase physical gold, it’s important to keep it protected so that it doesn’t get lost or stolen. The first option is to do this is by utilizing a safe deposit box at a local bank or gold dealer. Gold bars and gold coins can be kept at home in a secure safe, which should be located in a discrete area of the home. It’s best to keep purchases of gold coins and bars a secret to ensure that they stay safe and out of the hands of unscrupulous individuals.
Utilizing An Individual Retirement Account
There’s also a third option to use for storing physical gold. It’s important to understand how to hold physical gold in an Ira if you’re going to make this type of investment. By using an Individual Retirement Account (IRA), you can store your physical gold along with silver and other precious metals. This type of investment is often seen as a long-term way to combat inflation, and it also helps diversify an investment portfolio. There are specific rules that must be followed when using this method to invest in gold. These rules are initiated by the Internal Revenue Service.
Investing In Gold Exchange-Traded Funds
Exchange-traded funds (ETFs) have made it easier for investors to purchase gold indirectly. A gold ETF is managed by an expert who makes all of the decisions regarding gold allocations for the fund. There are several different types of ETFs. Some are designated to only invest in speculative gold mining operations while others invest in more stable gold companies. ETFs are traded on public stock exchanges, which means an investor will have to purchase shares and hold them in a brokerage account. These investment vehicles are similar to stocks as they are subject to short-term and long-term capital gains taxes.
Whether investments in gold are made by purchasing physical gold or by investing indirectly in ETFs, this type of investing activity acts as a good way to diversify a portfolio, store wealth and combat inflation.