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Beginner's Guide to Investing in Gold

By    |   Wednesday, 17 January 2018 09:21 AM

Gold is becoming an increasingly popular choice for first-time investors mostly because it’s simple and relatively stable and, more recently, its value is steadily rising.

In fact, according to U.S Global Investments CEO Frank Holmes, gold started the year at its highest year-end price since 2013 ($1,300). Based on 2016 and 2017 trends, Holmes expects the price to rise between $1,460 and $1,600 by summer.

With that in mind, it makes sense that more everyday citizens are beginning to consider investing in gold, but how does one get started? Here’s a quick, basic beginner's guide to what you need to know:

1. Different types of gold investments — There are couple of different ways to invest in gold and choosing one will depend on what you want out of your investment.

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Generation X Finance breaks the options down into physical gold, stored gold, gold mutual funds, gold mining stocks, gold EFTs, gold futures, and jewelry or rare coins.

Physical gold is also known as gold bullion and comes in bars or coins. Stored gold is essentially the same thing, but offered by companies who’ll store your investment in a secure vault.

In an article for Financial Freedom for Families, Svetlana Micheva recommends sticking to these two types as a beginner.

“Physical gold is the timeless asset which will always have a value, not the printed paper.  Holding the physical gold bars and gold coins in your hand is the only way to have control,” Micheva writes.

2. Understanding gold purity — As Prime Values points out, one of the biggest mistakes first time gold buyers make is not considering the purity of the gold.

Gold purity is measured in karats (K). Because gold is a soft metal, it’s often buffered with other metals, especially for jewelry, but the higher the karat, the more pure and fine your gold will be. 

According to Gold Crafters Exchange, 9K will contain 37.5 percent gold, 10K contains 41.67 percent, 14K contains 58.33 percent, 15K contains 62.5 percent, 18K contains 75 percent gold, 22K contains 90 percent gold, and 24K refers to near 100-percent pure gold.

Gold Crafters Exchange adds that gold will often take on the color of the metal that’s been added to it.

On that note, Prime Values warns against buying scrap gold or jewelry as an investment, as it can be very difficult to resell.

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3. How to buy gold safely —As is the case in almost any industry, you’ll need to do your homework to make sure you don’t fall prey to fraudsters.

The Birch Gold Group advises to look for a reputable dealer. Aside from ensuring the quality of your purchase, a reputable dealer should have a good understanding of the market and be able to answer any questions you might have.

If you’re interested in buying gold coins, you can use the United States Mint’s registry of retailers to find a verified retailer in your area.

Consumer Affairs recommends shopping around for prices. An 8-percent premium above the gold spot price is usually a fair charge.

The site also suggests finding out about the dealer’s buy-back policy and try to stay away from pawnshops, TV ads, cold callers, or any dealer without a brick and mortar location that can’t be verified.

Keep in mind that if you buy physical gold, you’ll need to consider where to store it safely to reduce risk of theft.

4. The best time to buy — Gold prices fluctuate regularly and are subject to a number of outside factors.

Obvious contributors to the gold price include politics, supply and demand, and the size of your purchase, but Consumer Affairs points out that there are a few other aspects to look at.

Oil prices, the season, and country of origin can also heavily influence prices.

According to the website, the gold price tends to flatline in the summer months before picking up again around October and November.

Bullion Vault suggests keeping an eye on the market so you can buy when prices are low.

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Gold is becoming an increasingly popular choice for first-time investors mostly because it’s simple and relatively stable and, more recently, its value is steadily rising.
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Wednesday, 17 January 2018 09:21 AM
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