14

How And Where To Invest In Gold – A Beginners Guide

Please share the knowledge

Person Thinking

How and where to invest in gold? With this post I will tell you how I, after 10 years experience, do it.

It’s a jungle out there today trying to figure out how and where to invest in gold. Everybody is saying different things and trying to sell their products to you.

With this post I’m not trying to sell you anything. I have been an active gold investor for almost 10 years now and I want to share with you the ways that I invest in gold. During these 10 years I feel like I’ve seen it all and hopefully this will help you make a clearer decision of how and where you should invest in gold.

How do I invest in gold?

When you first start to read about gold investing you will see that there is a lot of different ways to invest. You can invest through physical gold, ETFs, gold stocks, gold mining stocks, allocated storage and lots more.

This can easily be complicated which is why I like to categorize all gold investing into two categories.

  1. Physical Gold – This means that you physical hold the metal. You can feel it with your hands and you store it either at home or at some trusted third party storage where you know that there is actually a safe with your name on it where the physical metal resides.
  2. Paper Gold – This is when you invest in some sort of fund, stock or company that claim that they own the gold on your behalf. This is suppose to make it easier to invest in gold because you do not need to physically care about the storage yourself. Basically your owning a paper saying that you, hopefully, own some physical gold that is stored and taken care of by somebody else.

As you might already hear on the way that I talked about the two I only invest in physical gold. If I can’t touch it myself or know that my physical gold is stored in a vault with my name on it, I don’t own it.

Man holding a gold bar

Get physical gold that you can hold in your hands.

Why are you this skeptical towards paper gold? – you might ask.

Well, if we take gold ETFs as an example. In short how it works is that you will buy shares in a fund. This fund (often GLD on the COMEX market) is then suppose to own the physical gold. If you ever want to take delivery on your physical gold you will ask the fund and they will ship the physical gold to you.

This is perfect for traders that do not want to take delivery on the gold but maybe just own some gold for a couple of days to see it go up and then quickly sell.

As you can probably understand, these funds (GLD) can sell a lot more shares than they have physical gold backing it up in the vault. So what happens if everybody wants to take delivery of their gold at the same time for some reason?

Well, obviously the people that are ”last out the door” will not get any physical gold. They will be standing there with a paper saying that they own physical gold but there is no more physical gold in the vaults. This means that they just own a worthless piece of paper and their ”investment” has gone to zero.

Lets look at an example

This can maybe be hard to wrap your head around in the beginning so lets actually look at the GLD fund that is traded on the COMEX market. This is an ETF just like I was talking about above.

This chart is a little bit old so it is probably even worse now but as you can see there is 228 paper claims (shares of the ETF) for every ounce of physical gold. This means that there is 228 people thinking that they own the same physical ounce of gold.

Or if one person takes delivery of their physical gold that means 227 people will be left holding a worthless piece of paper and no gold. Or if 0.4% of the people invested in the fund decides to take delivery of their physical gold they will empty the vaults.

Now you couldn’t even pay me to invest in something that risky! I don’t know about you?

228 people holding paper claim to every 1 ounce of physical gold

228 people owning a paper claims for every ounce of physical gold. How do you think that will end?

One of the key reasons of why you should invest in gold is because it is considered as a safe haven. Gold has kept it’s value for over 5000 years and it can’t go down to zero or just collapse because it is a physical metal.

If you hold a piece of paper that can definitely go to zero and become worthless. In fact I think there is a big possibility that the people invested in ETFs like the GLD that we discussed above will see their investment evaporate. I hope you can see why by now.

So Rule #1: Invest in physical gold that you can hold in your hands and not in paper gold claiming that you hopefully (probably not) own some physical gold somewhere in the world.

The second most important thing after you have realized that you should invest in physical gold is that you should invest in gold bullion and not numismatic coins.

In short numismatic coins are rare collector coins. If you don’t know exactly what your doing when your investing in numismatic coins the probability of you getting scammed is very high. Please read what I have to say about numismatic coins before you consider investing in it.

When you buy gold bullion there is only 2 costs involved. The actual metal cost and the dealers profit. When buying numismatic coins there is a third cost involved which is the rarity. The rarer the coin is the higher the premium is. This means that when you buy gold bullion you will get more physical gold for your dollars. That is exactly what we want!

Also when, or if, we want to sell our gold in the future it is very simple to sell gold bullion. Because you are just selling the physical metal. When trying to sell a numismatic coin you need to find a buyer that wants your rare coin and is willing to pay what you want for it. This can take a long time or might not even happen.

Another important factor to consider when you’re buying gold is the purity of the gold bullion. You want your gold bullion to have at least 99.9% gold in it. The closer you get to 100% the purer and better the gold is. Watch out though because some dealers will sell gold bullion with like 97% gold and then the other 3% is some other cheaper metal.

So Rule #2: Buy gold bullion and not numismatic coins. This way you will get as much gold for your dollars as possible, which is what you want right? Also make sure that your gold bullion contains 99.9% pure gold or higher. Some gold bullion will contain other metals and not just gold. You want pure 24 karat gold!

20 Gram Credit Suisse Liberty Gold Bar

20 Gram Credit Suisse Liberty Gold Bar

Where do I invest in gold?

Man thinking

You know how to invest in gold now. The next big question then is where to get your gold from?

Okay, hopefully you have gotten a good grasp of how and what you should invest in when it comes to gold. Make sure you get the physical gold that you can hold in your hand. Get gold bullion so that you get the most amount of gold for you dollars and make sure that the bullion is at least 99.9% gold. Now where do you get that?

Again, this is just where I’m getting my gold. I am constantly on the hunt for the best way to invest in physical gold and I have been doing it for a long time. So if you want to invest in gold this will serve you well.

First of all I want to talk about the difference of buying from your local coin shop in person vs buying online. When I first started out I was buying from my local coin shop and everything seamed to be fine.

But after a while I was looking up gold prices online and I found that they were much cheaper and that I had a bigger selection to choose between. Have a look at your local coin shop if you want but I have found that the best, and cheapest, way to invest in gold is online.

When choosing where to invest from it all depends on how much money I want to invest into gold. Because gold is just like any other thing out there that you can buy. The more you buy, the cheaper it gets per item.

For example if you buy a big pack of toilet paper rolls the price per roll will be cheaper than if you bought a small pack of toilet paper rolls. Same thing with gold. It’s cheaper price per gram of gold if you buy a big bar compared to a smaller bar. Makes sense right?

Goldbroker logo

Goldbroker – The most professional online gold bullion dealer if you ask me.

So if I have $5000 dollar or more to invest at one point I will go to the place that I have been using for the past 3 years, Goldbroker.

Goldbroker is the most professional gold bullion dealer online that I have ever came across. No matter what your investment strategy is they have the option to make it happen. They also have your security in focus which is a big deal for me. When your investing in gold you want to feel security outside of the financial system. Goldbroker knows that.

If your from the United States you will also enjoy FREE shipping. They do ship internationally and their prices for shipment is very low, and again with security and insurance in focus.

Goldbroker have a wide variety of products in both gold and silver and in both coins and bars. There will definitely be a product for you.

An exciting thing about Goldbroker is that they have partnered up with maximum security vaults around the world where you can store your gold and silver if you do not want to take delivery. Your gold will still be there and you can arrange with the vaults to go see your gold in person.

Goldbroker – The most professional online dealer of gold bullion

Read Full Review of Goldbroker

 

I don’t have $5000 to invest. That is a lot of money! Does this mean I can’t invest in gold?

Of course not!

Investing in gold used to be the rich men’s game and you had to have a lot of money to start investing in gold. That is not the case anymore. How does opening up a FREE gold savings account sound to you?

This is a new revolutionary way of investing in gold. Now everyone can afford to buy gold and there is no reason why you shouldn’t start protecting your financial future with some gold bullion.

karatbars 1 gram gold cards

Invest in gold by the grams every month and everybody can afford to protect their financial future with gold.

You can transfer as little as $50 a month to your gold savings account to buy physical gold by the grams. Gold used to just come in ounces so you had to save up a lot of money before you could get your hands on some gold. Karatbars International is letting people buy gold in as little as 1 gram denominations.

This truly is a savings account but instead of saving your hard earned money in the bank where they are just paper or digital 1’s and 0’s your savings is in hard physical 999.9% gold bullion.

Think about it. Your not really spending any money or buying anything. What you do is transfer $50 of declining paper money into $50 worth of gold every month. At the end of the month you still have $50. But now it’s in gold and not paper.

Learn how to open up a FREE gold savings account

Read Full Review of Karatbars International


Please share the knowledge

14 Comments

  1. Hello Marcus,
    another great articel about physical gold. The chart you provide about the ratio of traded paper gold and physical gold of the fund is really interesting, to be polite. Do you know whether there exits a upper limit for this ratio? If not, than they could hold nothing in their vaults, like the other guys with the paper money.

    • Hi Bernd. Thanks for the comment.
      No there is no upper limit for this ratio. I guess the upper limit would be until their investors wake up and realize the ponzi scheme that is going on. There has been speculation for a long time that there actually is no gold in their vaults. Because on the chart it is ”Deliverable gold”. So technically they could just buy the physical gold somewhere as soon as they get a delivery request because they take 1-3 months before they deliver the gold.

      Everybody with paper money can just print as much as they want. The risk they have is that the people find out and then they go bust. But right now our bankers and investment firms are taking on huge risk so I can’t see why they wouldn’t do that.

      Thanks again,
      Marcus

  2. very interesting article, i thought about investing in gold, but don’t know nothing about the ways, i was thinking i might need to go as far as to Africa to get the best deals, lol, you brought me more clarity, thank you!! I would love you to compare other dealers with Goldbroker, why you recommend it the most, what downfalls other dealers have, thank you!

    • Hi Irina.

      Thanks for the comment. You definitely don’t have to go to Africa to get the best deal when it comes to gold.

      If you go into the actual review of Goldbroker you will see why I like goldbroker so much. I have tried a bunch of other dealers but I’ve found that Goldbroker is the most professional dealer out there.

      You have lots of options to choose between when you go with goldbroker. Free shipping in the US is also good. This is when you want to invest more than $5,000 and when you are spending that much money online you want to deal with the best and the people with the best reputation. That is Goldbroker.

      Have a look at gold savings account if you just want to start to invest in gold but don’t have that much money to invest in the beginning.

      Marcus

  3. Hi Marcus,

    Thanks for this man! I didn’t know that you can actually invest on a physical gold. I have been reading a lot about stock exchange and I don’t think I came across to something like this before.

    Great information! Thanks!

    • Hi Von and thanks for your comment.

      Yes you can definitely invest in physical gold. In fact, if you invested in physical gold the past 20 years you have probably seen greater appreciation than the stock market. Because remember, both 2000 and 2008 the stock market collapsed and if you did not get out in time (which nobody really did) you got hammered and your ”investments” almost disappeared over night.

      With gold, physical, you are protected against financial turmoil like that at the same time as the gold keep rising. Gold is up around 25% so far this year (2016-06). That is outperforming the stock market by a wide margin.

      So gold is a better investment than the stock market (right now at least) and with gold investment you don’t have to closely follow the markets every day in order to do well with you investments. You buy some gold and put it a side and watch it go up in price.

      I’m not saying that you should be out of the stock market. But every healthy investment portfolio should contain at least 20% physical gold.

      Thanks,
      Marcus

  4. Hi Marcus,
    Very interesting and informative article. I am a very beginning novice and have just started reading and investigating physical gold. My husband is the expert on metals in our family. We have had some gold and silver in the past, but sold them and have not started purchasing again. Hubby says the time is not quite right for that yet. What would you say to that?
    Thanks

    • Hi Kathy and thanks for the comment.

      I would disagree with your husband. Because I’m investing in gold for the long run. I don’t really care if gold goes up or down on a daily basis. Because if you look at the gold price over the long term (say the past 30 years) then gold is going straight up.

      So if your planning on holding your gold for a while there really isn’t any right or wrong time to purchase gold. Also, gold is up 25% this year (2016-06) and is the best performing asset out there. So if you would have had your gold and silver still that would have been a nice appreciation, right?

      I urge you guys to read the why should i invest in gold where I go over my top 3 reasons of why everybody should own some physical gold. And right now is definitely the correct time. I think the gold will continue to go up now, we have seen the lows and are on our way to higher territory. Get on the gold train now until it is too late and the gold price is much higher.

      Thanks,
      Marcus

  5. Marcus,

    Very informative and useful article about investing in gold.

    It’s easy to understand why having gold you can hold in your hand is better than buying a piece of paper that says you have gold somewhere — but especially since the sellers may actually sell more papers than they have gold! That seems wrong!

    Interesting point about buying bouillon vs buying collectible coins. I know coins are very tricky, since there are so many factors to consider in value. But your point makes it even clearer. How would I know (since I’m no expert) how much the shape of the coin adds to the gold? And everyone can understand gold, but many won’t know about coins.

    Thanks for the tips about GoldBroker and Karatbars. It makes it possible for everyone to start investing in gold!

    Roger

    • Hi Roger, thanks for your comment.

      Yeah it’s quite easy to see that they would do that. I mean if nobody wants to claim their physical gold you can just print a bunch of these papers. Why would it otherwise take 1-2 months to get your gold delivered? If they have it in vaults they should just be able to send it out, right?

      Don’t know if it’s the shape of the coin that matters. What matters the most is how rare the coin is (how many of them have been minted? And how many will be minted in the future?). If you don’t know more than the person selling you the coin then you will most likely be scammed.

      Plus exactly as you say, people know about gold which means when you want to sell your gold it’s much easier.

      Yes your right, with Goldbroker and Karatbars everyone can start to invest in gold. Please let me know if you have any questions.

      Marcus

  6. This very informative regarding gold. I know there are a lot people who are not sure how to invest in gold. Also, it’s great you added the differences between having ”paper” gold vs ”physical” gold.

    • Thanks for the nice comment.

      The difference between paper and physical is very important when you’re investing in gold. If your investing in paper gold you haven’t really gotten the reasons why gold is good in the first place in my mind. You are probably just investing in gold for a short period of time and are then planning on selling it.

      Thanks,
      Marcus

  7. Yeah, I totally agree, as soon as I read that ”You get a piece of paper saying you have gold” I thought to myself – Isn’t that the same thing as having paper money? Doesn’t that defeat the safety of buying gold? Why put your gold in someone else’s hands?

    Gold broker seems pretty legit too. As I’ve been reading your articles I’ve started to notice more Gold stores in my area and there are so many! I’ve always been thinking about walking in there but I always told myself ”Not yet”. Glad you introduced me to Gold broker. I will definitely check it out!

    -Matt

    • Hi Matt, thanks for your comment.

      Yeah your exactly right. If you just have a piece of paper saying you own gold that is probably even worse than paper money. Gold should be under your personal control. Either in your home or stored somewhere where you trust it and that it is outside of the financial system.

      Goldbroker offers storage at a high security facility for you gold at 4 different location around the world.

      Nice that you’ve started to notice the gold dealers around you. That’s a good first step. Remember though that because they have to pay for rent and other expenses the local coin dealers can often be a little bit more expensive. Make sure you check out the prices at Goldbroker first.

      They are very price competitive and you also get the safety of dealing with a well knows respected dealer.

      Thanks,
      Marcus

Kommentera

E-postadressen publiceras inte. Obligatoriska fält är märkta *