If you’ve been considering investing in gold, Gold Silver LLC advises that gold bars are the best way to go.
That’s because you’ll get more gold for your money this way than if you were to buy coins. The labor and machining costs that go into producing coins pushes their price up. Bars are also easier to store.
Gold is a good investment in general because it’s one of the only kinds that you can physically hold in your hand. It holds its value across the globe and is independent from modern currencies.
Here’s a look at five things you need to know before you buy gold bars:
1. The different kinds of gold bars available — According to the United States Gold Bureau, gold bars usually bear the stamp of the refinery where they were processed. The most common of these is PAMP, Credit Suisse, Perth Mint, and Elemetal.
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Gold Silver LLC adds Johnson Matthey, Argor-Heraeus, and Valcambi to this list and recommends only buying gold that carries a reputable hallmark (the name given to a manufacturer’s stamp).
Gold bars also come in different sizes — from one gram all the way up to 400 ounces.
Premiums drop the larger the bar is, but Gold Silver LLC says it’s still important to consider smaller bars, which are more easily divisible, easier to resell, and carry less counterfeiting risk.
2. Understanding the market — Canadian Bullion Services explains that because gold is a physical currency, its price is linked to global markets.
Its market value, or spot price as it’s more commonly referred to, will usually rise and fall with the markets. Keeping a close eye on this can help you determine the best time to buy.
The United States Gold Bureau recommends that first time buyers do as much research as possible before their purchase.
Good sources of information include industry websites, investment news, analyst’s findings, and financial publications. It’s important to make sure you read a mix of each type of source to ensure you get the big picture.
3. Where to buy — Personalincome.org points out that most gold sellers will ask similar prices based on the spot price, but middlemen or resellers may charge extra, so try to buy directly.
It’s also important to consider the reputation of the seller in to avoid scams. A good place to check the credibility of a dealer is on the Better Business Bureau’s database.
When considering a dealer, the United States Gold Bureau recommends asking how long have they been in business and whether they offer education along with their products.
Gold Silver LLC adds that larger dealers tend to be safest. They suggest comparing three dealers and looking at their buyback policies, total costs, commissions, bank fees, and whether they offer shipping insurance.
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4. Laws and regulations — According to Nomad Capitalist, it’s easy to buy small amounts of gold anonymously, but large sales are subject to meeting certain legal requirements.
OnlyGold.com says that some forms of gold, particularly those traded as commodity contracts in 1982, fall under the Broker Reporting Act of 1982.
Gold Silver LLC adds that gold that’s held for less than a year will be subject to Capital Gains Tax. They suggest chatting with a lawyer or accountant to find out how you will be taxed before investing.
5. Safe storage options — “Anyone that decides to invest in physical gold should have a plan for storing it before making a purchase.”
This is according to the United States Gold Bureau, but it’s a sentiment echoed by many experts.
Two simple options are buying a safe or a bank safety deposit box.
Personalincome.org adds that there are companies that offer safe storage of precious metals specifically.
Another option, according to Nomad Capitalist, is storing some of your gold in a safe jurisdiction offshore where it will be unaffected by local politics. Some countries to consider include New Zealand, Switzerland, the Cayman Islands, Austria, and Singapore.
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