Learning how to buy gold bullion is a positive way to balance out a portfolio. Investing in gold bullion has been a practice that has existed even before there were exchanges. The demand for gold has existed since the metal was first discovered. The history of gold as a currency is one of the primary factors that makes it a good investment today. The fact that gold can be used to reduce the investment risks caused by inflation is well known. This is because gold is both a commodity and a currency. It is pretty much impossible to go to the grocery store and buy milk with a stock certificate. Though not really used in today’s consumer world, gold can be used to make purchases.
Gold as an investment is currently a very hot commodity. The price of gold has shot up in value over the last five years, and it appears that the price may continue to rise. Expert investors have always relied on investments in gold to balance out the risks within an investment portfolio. This is one of the primary reasons newer investors should learn before buying gold bullion.
How To Buy Gold Bullion – Types:
Gold bullion can be purchased in several forms. Bars which generally come in several forms themselves. Bullion is a term that describes bulk gold. Bullion also is a term that is used for government issued gold coins. Bullion can also be a term that is used for gold blanks, smaller bars, and tabs. One of the key aspects of gold bullion that should always be looked at is the purity level of the gold in question. Learning how to buy gold bullion should require a brief look at the purity level of gold. The highest purity level of gold is .9999. This means that the gold was professionally assayed to be .9999 pure. Some gold is sold at a lower purity value. Lesson one of how to buy gold bullion is to always compare apples to apples. When considering price is it better to buy the purest or a product that may have no impurities? The purest product is almost always going to return the best profit.
How To Buy Gold Bullion – Price:
Lesson two in learning how to buy gold bullion is to understand the pricing of gold. The price of gold is set by the New York Mercantile Exchange. The daily spot price for gold is an average that is taken in the last two-minutes of the trading day. The average is a division of the lowest selling point and the highest selling point for that two minute period at the end of the trading day. The spot price of gold is a good resource for investors to monitor the activity of gold. There is a daily journal or chart that shows how the price of gold reacts to everyday economic pressures. The daily spot price of gold can be compared to the monthly spot price of gold to determine if there are positive trends.
The premium price of gold is a tool that determines how much gold has been marked up. Every person or business that sells gold must make a profit otherwise they would not stay in business. To determine the premium price of gold use the following formula.
((Quoted price – Spot Price )/sport price)) 100 = Premium Price of buying gold bullion. This formula will give you a percentage. The premium price of gold is an indication of mark up in cost. Most experts will agree that a markup in cost that is less than 10% is okay. It is a best practices rule that the purchase price of gold should be as close as possible to the sport price. This is because the price of gold will need to rise less than when the purchase price is higher. This means that is then becomes easier to see a profit from your investment.
How to Buy Gold Bullion – Storage:
Another lesson on how to buy gold bullion involves storage. Each investor will need to consider how their investment in gold will be stored. The cost of shipping is also something that should be considered as part of storage since both are costs that will need to be tracked as part of the overall investment cost.
Some investors store gold on site in home security vaults. Other investors store gold off site either at a gold storage vault or in a banks safety deposit box. Keeping some gold at home is acceptable, especially if the gold is to be used as an emergency fund. It is not wise to store a great dollar amount of gold at home. Homes are not as secure as other storage options and any sort of break-in/robber may put your family at risk. Bank safety deposit boxes are secure, however, at one time in American history the American government raided safety deposit boxes for gold. An off site gold storage vault is not only secure it is designed specifically for storing precious metals.
Regardless of which option is chosen to store gold the cost of gold storage and shipping should be considered before buying gold bullion. To keep the price of gold as close to the spot price, ancillary costs will need to be controlled. This means keeping track of costs like shipping, storage, packaging, etc before buying gold. All of these factors, including where to buy gold bullion from should be considered as part of the price of gold.
How to Buy Gold Bullion – Safety:
Gold can be bought online or through a broker. Learning how to buy gold bullion online is as important for the small investor as where to buy gold bullion. Online purchasing can help to lower costs, but it is not without risk.
Using a broker to purchase gold is not only easy it is a bit more secure. The cost can be a little bit more expensive if you consider the brokerage fees and service charges as part of the purchase price of the gold.
To help increase the safety of online transactions, it is wise to investigate the brokerage before buying. Most brokerages have a relationship with a mint and the mint or other consumer groups can help to verify if there have been problems with consumer satisfaction. This would be a good indication of whether or not the brokerage can be trusted.
Keeping the investment transaction safe will help to increase profits and possibly save money on future transactions by establishing a working relationship. It is always good to shop around but make sure that comparisons are the same and that all costs of buying gold bullion are included in the purchase price.