Precautions Before Investment In Gold

When buying gold there are a myriad of pitfalls to avoid before spending your hard-earned money. I’ve compiled a list of the top ten gold investment strategies for investors who are new to the market and are looking to get the best worth for their money Auctus Metal Portfolios.

1) The first tip and what I consider to be the most important advice before buying gold is to do some research. It might sound obvious, but there are many new investors that get excited about purchasing gold and settle for the first gold store they see online. Be sure to do your homework prior to buying since this could result in thousands of dollars should you do something wrong.

2.) Do not buy numismatic coins unless you’re an avid collector. Numismatic coin are collector’s coins and carry a significant increase over the current value of gold. Numismatics include extremely uncommon coins, graded coin shipswreck coins and more. Remember, you’re investing in the commodity (gold) therefore you need the highest amount of gold for your amount of money.

3.) Only purchase bullion coins and bullion bars. Gold bullion is just gold that is produced in mass quantities. Gold bullion is 99.9 percent pure gold. It comes as government minted coins, rounds, ingots, and bars. You should buy gold bullion since the premium that it carries over the spot price is minimal. For instance, the current gold price today is about $1,100/ounce. If you were to buy the numismatic gold coins, it might cost between $1,500 and $100,000 for one coin. A bullion coin such as one like the American Gold Eagle might be $35 above the current price. A much better deal.

4.) Compare the different gold bullion options. Gold bullion typically minted by government mints like the Perth, Australia mint or U.S. mint carry a greater value in comparison to the gold-plated rounds. Gold rounds are not considered coins because they are not legal tender. They don’t possess a price the same way as an U.S. gold coin does. They’re generally less expensive to purchase.

5) Stay clear of fool’s gold. “Fools gold” is a term used by many to describe Gold ETFs (Exchange Traded Funds). GLD is one of these funds which you can invest in by your broker. The issue of these funds is they do not have ownership of the gold you are investing in. The ETFs are derivatives so you’re only exposed to the price of gold. The GLD is generally believed not to have the gold that they claim to have, because they do not permit an audit by a third party of the gold that is stored.

6.) Be weary of the gold futures contracts that are traded by the COMEX (Commodities Exchange). These are just futures contracts to buy 100oz of silver per contract. If the future date is set and the gold price has risen and you are able to make a profit. The COMEX too has been scrutinized for allegedly defaulting in the provision of gold to customers. There is also speculation that COMEX is using cash settlements instead of physical delivery. COMEX is using cash settlements to replace physical delivery of the gold to customers. Technically, this is regarded as to be a default.

7) Diversify your physical possessions. Just like any investment portfolio you need to purchase different types of gold. Do not just place all of your money in American Gold Eagles. It’s a good idea to diversify your portfolio because you don’t know which coins could offer a greater value when you decide to sell them.

8) Choose different denominations of gold coins. You can buy most precious metals in 1/10 ounce or 1/4 ounce, half ounce, and 1 ounce. Some coins are even minted in 10 oz or higher. It is important to keep in mind that smaller denominations carry the highest price due to the fact that it required more time and energy to mint.

9.) Beware of putting your gold into bank lock boxes. It’s better to find a place to keep your precious metal that is not known to anyone else rather than rely on the fact that banks will let you take your gold in the event of a bank run. Another option is a super heavy safe that’s bolted on the ground.

10) Do not reveal to anyone that you are investing in gold. If the time comes when the price of gold is soaring, which is what experts predict will be the case sooner rather than later, you want to make sure that your investment stays unknown to potential thieves.

This isn’t an exhaustive guide to investing in gold, but it might assist you who are just beginning to learn about the gold market.

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