Since time immemorial, gold has remained one of the most traded commodities. Humans have been trading with gold long before the introduction of stocks, bonds, and other paper investments. In ancient times, gold was common among royalty and wealthy families. It was a sign of power and prosperity. These days, however, one can easily purchase and own gold in different capacities. Some people buy gold jewelry, while others choose to invest in gold to diversify their portfolios.
Investing in gold can be challenging, especially for beginner investors. Before investing in this yellow metal, it’s vital to be extra cautious and equipped with the necessary know-how. There are several ways you can invest in gold. They include gold bullion, mining companies, gold individual retirement accounts (IRA), and exchange-traded funds (ETFs).
Each of these investment plans has its own set of benefits such as inflation hedge and drawbacks. For this reason, it’s important to conduct extensive research to identify the ideal investment plan, giving you the value of your hard-earned money.
Additionally, this article will give a quick rundown of one of the investment plans—gold bullion. Below, you’ll find more information about what gold bullion is, tips for investing in them, and more.
What Is Gold Bullion?
Gold bullion generally refers to gold bars, but it may also be in the form of coins. When purchasing gold bullion, it’s important to know its purity, origin, and weight. Understanding its origin will help you avoid purchasing unethical gold that could be facilitating child labor, wars, and unsustainable practices. Purity also plays a huge role in determining the price of gold bullion. The purity of investment-grade gold ranges from 99.5% to 99.9%.
Tips To Invest In Gold Bullion
As mentioned above, investing in gold can be challenging, especially when you’re not equipped with the necessary know-how. The guide below will help simplify the process:
1. Look For A Reputable Vendor
Over the last few years, there have been many gold merchants you can choose from. With so many options available, it can be challenging to choose a reputable vendor, and this may increase your chances of getting duped by dishonest suppliers out there. You can consider visiting the Bullion Exchange review or any other reputable vendor in your locality to learn more and purchase this investment plan. However, it’s important to conduct enough background checks to gauge the reputation and credibility of the gold merchant.
One way you can determine a gold merchant’s credibility is through certifications. Before purchasing your gold bullion investment, it’s important to ensure the merchant is licensed. A reputable vendor may display their certification on their sites or social media platforms. If it’s not there, make an effort to request the merchant to send it to you. A vendor who is reluctant to share their documentation might be a cue for you to move to the next vendor.
Another way is to go through testimonials. This will help you gauge whether the vendor will meet your needs and expectations. Hence, it’s important to refrain from investing in a merchant with lots of negative reviews.
2. Avoid Investing In More Than You Can Afford
Any investment comes with risks, and gold is not an exception. When you’re reaching out to a gold merchant, they might encourage you to leverage your investment as a down payment; thus, you’ll be encouraged to buy more gold than you can afford.
For instance, if you want to invest US$5,000 worth of gold bullion, the gold merchant may convince you to utilize the money as leverage and own three times as much gold. So, instead of owning US$5,000 worth of bullion, you’ll be owning US$15,000.
However, you need to pay off interest rates for the amount you owe. And whether the price of gold increases or decreases, you still need to pay that interest. So, before you take a huge risk, make sure you understand what you’re getting into. As much as possible, only invest as much as you can afford.
3. Don’t Forget About Storage And Security Fees
As mentioned above, bullion is the physical form of gold. Thus, when investing in gold bullion, it’s important to have a secure space where you’ll be storing your gold. Most gold vendors might be providing storage solutions. But make you review their security measures before storing gold bullion in their vaults. This will save your investment from theft and other related issues.
Apart from security measures, it’s important to know their storage and maintenance charges. Thus, it’s important to visit more than one service provider to understand the average cost in your locality, saving you from paying more for similar services.
Another storage solution you might consider are bank vaults. You can visit your bank and ask them about gold bullion storage. The major benefit of bank vaults is that your investment will be insured against theft, loss, and other issues—making them the most secure option.
Storing your gold bullion at home is also an option. Although it might be the cheapest option of all, it’s not the safest. The conditions and room temperature of your home may also not be conducive to preserving gold bullion well.
4. Keep Liquid Gold On Hand
Keeping your bullion in storage vaults might be the safest way to keep your investments secure, but what if a situation arises and you need to cash out quickly? Gold bullion stored in bank vaults is difficult to liquidate since you have to go through a process. If you want easy access to some of your gold investments, you need to keep them at hand.
The key, however, is to just have enough to pull you through difficult or unexpected situations. It’s still advisable to put the majority of your gold in secure vaults. Also, gold coins are much easier to liquidate than bars, so they are a better option if you want some of your gold investments within reach.
Bottom Line
Gold has been around for centuries and it has remained a symbol of prosperity throughout the years. Investing in gold, however, is a whole different ball game and is not advisable for newbie investors. By conducting more research and with the help of the pro tips listed above, you can gain more advantages than the average investor.
