Here is an easy-to-follow checklist for purchasing gold as an investment, designed especially for the uninitiated. This guide will walk you through the steps to confidently purchase gold – physical gold and gold ETFs (Exchange Traded Funds) – for investment, using reputable sources and institutions.
Step 1: Understand Your Investment Goals and Options
Determine why you want to invest in gold. Are you looking for a hedge against inflation, portfolio diversification, or long-term wealth preservation? Understanding your goals will help you choose the right type of gold product.
Explore the different types of gold products available.
- Physical Gold: This includes gold bars and coins. You have direct ownership of the metal.
- Gold-Backed ETFs (Exchange Traded Funds): These funds track the price of gold and allow you to invest in gold without physically owning it. Examples include SPDR Gold Shares (GLD) and iShares Gold Trust (IAU).
- Gold CFDs (Contracts for Difference): These are leveraged financial instruments that allow you to speculate on the price of gold without owning the underlying asset. Be aware of the risks associated with leverage.
- Gold Mutual Funds: These are investment funds that may hold gold or shares of gold mining companies.
- Gold IRA (Individual Retirement Account): A specialized IRA that allows you to hold physical gold. Dealers like Augusta Precious Metals specialize in gold IRAs.
- Consider the pros and cons of each type. Physical gold offers direct ownership but involves storage and insurance considerations. ETFs are liquid and easy to trade but do not give you physical possession. CFDs offer leverage but are higher risk.
Step 2: Research Reputable Sources for Buying Gold
Identify well-known and reputable gold dealers and brokers. The sources provide a comprehensive list:
For Physical Gold:
- JM Bullion
- APMEX (American Precious Metals Exchange)
- GoldBroker
- Money Metals Exchange
- SD Bullion
- BullionStar
- GoldMoney
- BullionVault
- GoldCore
- Kitco
- Sprott Money Ltd.
- BullionByPost
For Gold ETFs and CFDs:
- FP Markets
- ActivTrades
- BlackBull Markets
- Pepperstone
- IG International Limited
- Fidelity
- eToro
Official Sources:
- U.S. Mint (for American Eagle/Buffalo coins)
- The Perth Mint (Australia)
Check for regulation and a strong track record. Look for brokers regulated by financial authorities (e.g., CySEC, ASIC, FCA, CMVM). For dealers, check for Better Business Bureau (BBB) registration and ratings. APMEX has had an A+ BBB rating since 2004, and Money Metals Exchange also has an A+ rating.
Consult educational resources and review platforms. Websites like NerdWallet, Investopedia, Money.com, StockBrokers.com, and Comparebrokers.co offer reviews and comparisons of gold dealers and brokers. USAGOLD also provides extensive educational resources on choosing a dealer.
Consider the London Bullion Market Association (LBMA). Membership in the LBMA signifies adherence to high industry standards and the "Good Delivery" standards for bullion. BullionVault and GoldCore are LBMA members.
Step 3: Compare Pricing, Fees, and Features
Ensure transparent pricing. Reputable dealers should offer clear, real-time pricing often tied to the spot price of gold. Understand any premiums charged above the spot price. Money Metals Exchange offers a "Best Price" guarantee.
Understand all associated fees. These may include:
- Premiums: The markup over the spot price of physical gold.
- Commissions: Some brokers charge commissions on transactions. FP Markets offers no commission on standard accounts.
- Spreads: The difference between the buying and selling price, common with CFD trading.
- Storage Fees: If you choose to store physical gold with a dealer or in a vault. BullionVault has low storage fees.
- Shipping and Insurance Costs for physical gold delivery. APMEX offers free shipping on orders over $199, and JM Bullion offers free delivery above a threshold. BullionByPost offers free insured next-day delivery within the UK.
- Expense Ratios: For gold ETFs. SPDR Gold Shares (GLD) has an expense ratio of 0.40%. iShares Gold Trust (IAU) has a low expense ratio.
- Buy-Back Fees: Some dealers may charge fees when you sell your gold back to them.
Evaluate storage options and security. For physical gold, consider a home safe, a bank deposit, or dealer-provided vaults. Ensure storage is secure and insured. GoldBroker allows for storage outside the banking system. SD Bullion offers its own segregated storage service insured by Lloyd's of London. BullionStar offers a "BullionStar Vault" program in Singapore, the US, and New Zealand. GoldMoney provides allocated storage in multiple countries. GoldCore emphasizes personal vault storage in high-security locations.
Check for buy-back programs and liquidity. Prioritize dealers or brokers with established buy-back programs or easy resale options. JM Bullion has a buyback program. BullionVault provides a live order book for trading.
Consider minimum investment requirements. Some brokers may have minimum order amounts. JM Bullion has no minimum order.
Step 4: Make Your Purchase and Secure Your Investment
Choose your preferred method of purchase. This will depend on the type of gold product and the platform you choose.
For physical gold, ensure secure and insured delivery. Track your shipment and inspect the package upon arrival.
If using a broker for ETFs or CFDs, understand the trading platform and execution. Pepperstone is regarded for execution speed.
For physical gold storage, understand the terms and security measures. Ensure your gold is fully allocated (not pooled) and insured.
Keep records of your purchase, including receipts, certifications, and any storage agreements. For physical gold, look for product authentication like assays and certifications. The U.S. Mint incorporates anti-counterfeiting features in its coins.
Step 5: Stay Informed. Monitoring Your Investment and Market Trends
Keep track of gold prices. Resources like APMEX, JM Bullion, and Kitco provide live price charts.
Stay updated on market news and analysis. Bloomberg offers a Gold Investing Guide with articles on market trends. Kitco is also known for its real-time market news. Kiplinger provides financial advice on gold investing.
Understand the factors influencing gold prices. Gold prices can be influenced by economic indicators, inflation, interest rates, and geopolitical events.
By following these steps and utilizing the reputable sources mentioned, you can confidently navigate the process of buying gold as an investment. Remember to conduct thorough research and understand the risks associated with any investment.