by Susan Paige
Every money-smart individual should know that gold is a valuable asset to own. It’s known to retain its value, and has acted as a hedge against inflation for thousands of years. So, adding gold to your investment portfolio is a great way to ensure greater wealth stability and security, and protect yourself against financial crises.
There are many ways to invest in gold – you could put your funds into stocks and shares, a gold exchange-traded fund (ETF), or a trust unit. But, purchasing physical gold leaves you with a certain level of control over your asset, that you simply wouldn’t get with other investment methods.
Despite the popularity of gold as an investment asset, it’s tough to know exactly how to get started when looking to make a purchase. To save you time and research efforts, here’s exactly what you need to consider when buying physical gold.
What to buy and where
Gold bullion can be purchased in the form of bars or coins – this is what you’ll usually purchase if you’re looking to own a large quantity for investment purposes. You can also buy gold jewelry – it’s not likely to be worth as much as gold bullion, but you may find you have a larger pool of customers should you ever want to sell.
You can buy gold bullion from private mints, dealers or other investors, both online or in person. With the United States being the fifth largest producer of gold worldwide, it’s not hard to find gold – but knowing exactly what to look for and how much to buy can make the process of investing more complicated.
Factors to consider
You’ll want to make sure that your gold purchase suits your needs. There are practicalities to consider, such as where you’ll keep your gold; and decisions to be made, like how much to buy. The following are a few factors you’ll want to consider.
Storage
Buying physical gold in large quantities means finding a safe, secure place to store it. Investors usually opt for a safety deposit box or vault at a bank, but you can store it in a home safe too.
Insurance
Large quantities of gold kept at home usually won’t be covered by home insurance, so you’ll need to look into other options, such as purchasing a floater policy, or a private collection insurance policy.
Provenance
You should think about where your gold has come from, who has owned it, and where it has been displayed or stored. For example, owning gold that was once owned by a notable figure could considerably increase its value.
Purity
24-carat gold is the purest form of gold, and is of the highest value – this is what you’ll find in bullion bars and coins. The monetary coins that we see in circulation are around 22-carat, with gold jewelry consisting of anywhere between <14-carats to 22-carats.
Alternative options
Buying physical gold won’t be a wise investment choice for everyone. In fact, whether or not you’ll find it worthwhile will depend on your personal situation and financial goals.
Ultimately, buying physical gold is fairly easy. But handling it, storing it, and finding a way to sell it on is much more difficult. If you’re looking for a more passive investment, you might benefit from putting your money into a managed investment portfolio, whereby an expert makes investment decisions for you and manages your accounts.
Seek financial advice
Buying physical gold is simple, depending on your needs and aims. If you’re looking to purchase large quantities of gold for investment purposes, make sure to do plenty of research or consult a financial advisor to make the most of your gold purchase.
So, what do you think ?