Investing in Gold: A Complete Guide

Why Invest in Gold?

From the Spanish conquering parts of present day Mexico in the 1500s to take over their gold from the Aztecs, to the American gold rush of the 1850s, gold has drawn people in for centuries. Although most people do not invest in their gold by panning for it in a northern California river, people are still drawn to the shiny yellow metal as a way to grow their wealth.

In the current economy, gold can be a smart investment because there is a limited supply of physical gold on the planet. Although the supply does increase as more gold is mined from the earth, this supply increases very slowly over time. This means that gold is very resistant to inflation. Unlike the value of a dollar bill that constantly changes, or stock in some other company that fluctuates, gold is a good investment to make if you are trying to find something that holds its value over time, as long as you invest in it the right way.

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What is the Gold Standard?

You hear products called the “Gold Standard” all the time, but what does this actually mean? When the gold standard is used to discuss the type of economy that a country has it means an economy where a country equates the value of their paper money to a certain amount of gold. This means that if a country works on the gold standard, that any citizen could purchase that amount of gold from the gold reserve based on the physical money this person had. This is a benefit for the economy because it means that gold acts as a stabilizing agent on the economy to protect from inflation, discourages government budget deficits and government debt. As you can probably guess from this description, the American economy is no longer on the gold standard.

Although the United States is no longer on this type of Gold Standard, it is still an important term in describing the importance of gold. Gold was used by everyone from the ancient Egyptians to modern day jewelry and more, and is a very strong market in the world today. This is why gold still has a strong “Gold Standard” even if the whole economy is no longer based on it. It is still a safe investment because it maintains its staying power and value over long periods of time.

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Ways to Invest in Gold

There are many ways to invest in gold in today’s market. You can invest in Gold exchange-traded funds (ETFs), buy stocks in mining companies, or purchase physical gold. Gold ETFs give you the benefits of not having to store the real gold, the possibility of your gold being stolen, the ability to grow your potential earnings tax-free as part of your Roth IRA, and also the ability to trade them very easily.

Mining stocks allow you to invest in gold indirectly through investing in the mining companies themselves. Mining stocks have the potential to be more lucrative because these businesses have the potential to grow overtime whereas gold stays relatively stable over many years. Investing in a mining company allows you to invest in something that produces more than just gold as many mines also produce other precious and semi-precious metals.

The final way to invest in gold, is to actually purchase tangible gold. When you purchase physical gold, you can buy it in the form of a gold certificate, gold coins, or even gold bars. Gold certificates allow you to purchase gold without physically owning it. This means that you buy a certificate from a company who claims to have enough gold to back the certificate. When you buy an unallocated gold certificate you are trusting that the company actually has enough gold to back what they are selling you. When you buy an allocated certificate, it means that you will have to pay a higher price for the guarantee of the company having your amount of gold. If you want to buy a gold certificate, it is important to find a reputable seller to ensure you are getting what you are paying for. One of the most reputable places to purchase a gold certificate is the Perth Mint which is supported by the government of Western Australia.

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The next option for purchasing gold is in the form of gold coins. These are a more convenient way of owning and storing the gold because they are in the form of smaller coins, however, when you are purchasing gold coins you have to pay markup fees due to the cost of producing a gold coin from raw gold. This means that you will be paying slightly more than what the gold is actually worth. In addition, many gold coins are stamped with an attractive design or have some type of historical value. Gold coins also do not contain as much gold as a bar would because of the other metals required in their production process. That being said, gold coins have the potential to have more value because they are a collector’s item and will grow in value.

The final option for purchasing gold is in the form of gold bars or bullion. A gold bar is the option that you will want to choose if you are trying to purchase the most pure gold possible. Real gold bullion should be stamped with 99.99% as a symbol of how pure they are. In addition, when you are looking for gold bars to purchase, it is important to find reputable dealers who will not charge you extra fees for their process or service. It is also important to purchase gold in workable sizes to increase your chances of resale later. For example, if you are trying to purchase 10 ounces of gold, it will be easier to sell smaller 1-ounce bars later, than if you purchased one solid 10-ounce bar.

Conclusion

There are many things to take into consideration when you are trying to buy gold as part of your investment strategy. You have to take into consideration what type of gold investment you want to make, whether it is an ETF, mining stock, or solid gold bullion. In addition, you have to consider where you will store this solid gold to keep it safe if that is your desired option. Also, you will have to decide between gold coins or gold bars and what sizes of each you wish to purchase in order to increase your future selling power. Gold is a long term investment that can help you maintain your wealth over time, but it is important to do your research in order to find the gold option that is right for you to include in your portfolio.

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