How to Start Buying Gold

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When assets like stocks, bonds and home values become less reliable based on the world's economic conditions, owning assets like gold can become an attractive option to many individual investors. Gold has been a valuable asset all over the world for thousands of years, and shows no signs of losing its status as the investment of choice when the economy is in poor shape. There are a number of ways to start buying gold, and which one you choose depends on your specific investment goals and plans.

Determine how you want to own gold. Consider bars and coins or exchange-traded funds for your first gold purchases. Remember that if you choose to buy your own gold bars and coins, you will need a safe deposit box or other secure location to store it; exchange-traded funds offer the security of gold without the risk and hassle of storage.

Obtain a safe deposit box if you choose to own physical gold coins and bars; almost any bank has these boxes available. Visit a local gold dealer and discuss what they have available in gold bars or coins; alternatively you can purchase gold bars and coins online. Work with only reputable dealers no matter if you choose to buy locally or online; this will ensure that you receive exactly what you pay for. Store all gold you buy in your safe deposit box and only access it to put new gold in or to remove gold for sale at a later date.

Visit a brokerage company to discuss exchange-traded funds if you choose to start buying gold in this manner rather than owning physical metal. Remember that an exchange-traded fund will trade on the stock market as though it was a regular stock. Research gold-backed exchange-traded funds online and invest through a discount Internet brokerage if you are comfortable doing so; this will save you money on fees and commissions in the long run.

Consider using both exchange-traded funds backed by gold and physical gold when you start buying gold — each has advantages and disadvantages. By choosing to combine the methods, you can provide yourself with additional security and diversity across your starting gold investments. Remember, also, that only by trying out each option will you really be able to determine which you prefer.

Tips

  • Start buying gold slowly, as the price can fluctuate a great deal just like any other investment. A buy and hold strategy works as well with gold as it does with stocks or other investments.

Warnings

  • Don't buy rare or collectible coins if you want to invest in the value of the gold itself. These coins will fetch a price far above the value of the gold that they contain.

References

About the Author

David Somerset has been a writer intermittently for 11 years. He attended New Mexico Tech and earned a Bachelor of Science in technical communication in 2007. From being published in the "Bucksworth Community News" to writing how-to articles for eHow, his experience is quite diverse.

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