The Complete Guide to Buying Gold Online for Beginners

The Complete Guide to Buying Gold Online for Beginners
The Complete Guide to Buying Gold Online for Beginners

Confidence in gold is unshakable. As concerns mount over the stability of a global economy still unbalanced by monetary policies and bail-outs undertaken in 2008, more investors want it in their portfolios. It’s an inflation hedge, a defensive strategy against stock market losses, and the final hedge against economic catastrophe. Gold is incredibly durable, both physically and abstractly. As a material, it doesn’t rust or breakdown. Abstractly, it doesn’t depreciate the way others assets do. Gold is real, physical wealth.

Even investors who don’t expect a return to the gold standard (and the massive increase in price that would come with it) want to diversify their portfolios. The security it offers against higher-risk investments is very appealing in an economy that seems to have reached its peak. Now that everyone expects a correction, it’s a great time to invest in gold.

The best way to buy is in the form of bars or coins. Gold bullion offers the lowest third-party risk, and buying it online is the easiest way to save money while you do it. When you buy gold online, you have your pick of a large number of products.

Pick the Gold You Want

There are many forms in which bullion comes. When you buy gold online, you have plenty of time to compare products, do your research, and make sure you walk away with the right product for your investment needs.

Gold Bars – These are cost-effective way to invest in coins. They can made by national mints or private refiners such as Credit Suisse, Valcambi Suisse, or Johnson Matthey. Bars are available in 1 oz. weights but are also an excellent option for weights above 1 oz. The premiums tend to be lower as well, as they lack the designs that go into the creation of coins (and can give them collectible value later on). There are simply lower production costs for labor and machining.

Gold Coins – Although bars tend to have the lowest premiums, gold coins remain one of the most popular ways to buy the precious metal. Investors choose gold coins because of the advanced security features available on some, as well as liquidity. Some coins like the American Eagle and Canadian Maple Leaf are readily accepted in global markets. That said, you are unlikely to have any difficulties selling bars either. Gold coins are also popular for lower value investments, as they are most readily available as 1 oz. coins.

Gold coins come from many different national mints. The most widely accepted include the American Eagle, Canadian Maple Leafs, South African Krugerrands, British coins, Chinese Gold Pandas, Austrian Philharmonics, and Australian coins from the Perth Mint. If you are buying strictly as an investor, avoid collectible coins.

Learn About IRA-Eligible Gold

Did you know that you can buy your gold online and save as part of your IRA? As part of a self-directed retirement savings plan, you can buy bullion coins and bars a tax advantage. An IRA is one of the most effective ways to save for retirement. Using one will help reduce your tax bill when you cash out your savings in the future, allowing you to pay taxes based on your lower, post-retirement income.

Including gold in your IRA can help you design a balanced approach to investing that mitigates higher-risk, higher-return investments like stocks with a defensive asset. Buying bullion as part of IRA has also become much simpler in recent years. The stock market collapse of 2008, the inflationary monetary policy that followed, and the concurrent metals bull market pushed gold closer to the mainstream. Now you only need to find an online dealer who offers IRA-eligible gold. Remember, only bullion, i.e. coins and bars, can be included in an IRA.

Learn the Spot Price of Gold and Find a Low Premium

The spot price of gold is the current market value. As an individual investor, expect to pay premiums-over-spot because you’re buying from a company that needs to make money. Not even the big banks pay prices at spot; they pay the price determined by the London Gold Fix, which accounts for storage and insurance costs on future delivery. That said, buying online can help you keep your premiums low – just make sure you get a good deal on shipping and insurance.

The spot price refers to the market price for one troy ounce (31.1 grams) that is .999 pure. Investment products such as bars and coins usually have their purity stamped in decimal format, so .999 is 99.9% pure gold. If it is listed in karats, be wary, but 18 karat is only 75% gold (and therefore not bullion), while 22 karat is .9167, the purity of an American Gold Eagle.

Use Discretion

The next step in buying gold online is having it delivered to you. It’s a good idea to use discretion and a company that understands the wisdom of keeping your purchase private. The packaging should be discreet about the contents, with no indication that the contents include gold. A company’s name can be a major giveaway, so make sure they take appropriate steps to avoid advertising the contents of the package include gold coins or gold bars.

Allocated Gold Storage Options

Taking insured delivery is an easy way to receive gold you’ve bought online for smaller quantities, but you should have a storage plan. That may be a home safe or storage with a bank, though at a bank, you’re not guaranteed that the gold you put in will be the gold you take out, since they use non-allocated storage. There are also concerns regarding bail-in regimes that should be taken into account.

An alternative is allocated storage with a gold storage company. Some online sellers also offer allocated storage options.

It’s easy to buy gold online. Make informed decision about the product you want and do your research into reducing premiums, storage options, and tax advantaged ways to buy gold. The rest will fall into place.

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