In the current climate of financial uncertainty and fear, many people are asking themselves how to buy gold safely and easily. Journalists talk of this as a "flight to gold". So what is the best way for you to get your hands on the lovely yellow stuff?
Why Buy Gold In The First Place?
Gold has historically been a preserver of value. Whilst your banknotes can become worthless in the event of a crash, gold and other precious metals have many intrinsic properties that make them forever valuable.
Remember, although many people speculate on the price of gold and there can be strong trends (such as the recent gold "bull run"), gold is still generally thought of as a preserver of value so I don't personally recommend you invest in it if you are only looking to make money. If you only want to make money then you are better off looking at the stock market, forex, other commodities etc.
Your Local Gold Dealer
Every city has several local gold dealers. If you visit one then he will quote you a price that he buys at (per ounce or gram) and a price that he will sell it to you at.
For example, if I check the prices at my local gold dealer right now then I can see that on a 10 gram bar of gold that they will buy it from me for 210 GBP but sell it to someone else for 241 GBP.
The difference of 31 GBP is called the "spread" and is where the gold dealer makes his money from to pay for his rent, salaries and his expensive vacations!
As you might have guessed, the local gold dealer is one option. They will have a variety of coins and bullion but you will pay a hefty premium for the convenience.
Coin Invest Direct
This is a German company with branch offices in other European countries e.g. London. They have excellent prices and their spreads are low because they do not deal with customers walking in off the street - they are strictly a mail order business only. I found them via a recommendation from a friend.
As far as I know, they are the best company (in terms of service and price) for getting gold and silver coins in Europe. Their spreads are tighter than your local dealer so you will get a better price whether buying or selling it.
By the way, you don't need to worry about your gold getting "lost" in transit. First of all, it is highly unlikely because they send it via signed international courier (e.g. UPS, FedEx). Secondly, it is insured so you are completely covered with no risk to you.
Digital Gold Currencies
These are a recent phenomenon of the last few years. The most famous example is E-Gold but there are others too such as Pecunix and Liberty Reserve.
When you buy these digital currencies, how do you know that you haven't simply bought some monopoly money?
These digital currencies are all "backed" by an allocation of real gold that sits in a bank vault and is audited regularly. Without this transparency, nobody would have enough confidence in a digital currency to start buying it in the first place. However, you have no legal ownership of this gold - it has been bought more as a marker of trust.
Like holding gold coins, should your home currency become devalued then the value of your digital currency should be unaffected or even rise (because it will be seen as a safe haven).
The most reputable companies offering digital gold currencies are Liberty Reserve and Pecunix. Pecunix in particular has especially strong security measures.
BullionVault is a very unique concept and, to my knowledge, there is nothing else like it out there.
It was created to allow people from all over the world to buy and sell gold and to be able to keep it in a secure vault without the need for huge upfront costs. You can keep your vaulted gold in either London, New York or Zurich.
Unlike digital gold currencies, you have full legal rights to your gold. With digital gold currencies, you rely to some degree on a high level of community trust in the currency provider.
With BullionVault, it is more like trading on an exchange. You receive a legally binding contract note each time you buy or sell any gold. If the proverbial hits the fan then you have the legal right to even turn up at the vault and pick up your gold because you legally own it.
BullionVault is also probably the largest single marketplace for gold anywhere on the planet. This means that you can get some incredibly good prices. For example, the spread on 10 grams of gold quoted above from your local dealer was 31 GBP. Today, BullionVault show a price to buy at 223.30 GBP and to sell at 222.98 GBP. That's a spread of just 32 pence or 0.32 GBP!
Buying gold and other precious metals is a great way to protect yourself against currency devaluation such as that seen not too long ago in Iceland. If you're interested in protecting yourself then I recommend you go with either Coin Invest Direct or Bullionvault.