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What is the best way to buy gold?

By Edited Jun 9, 2014 1 2

Buy gold
Credit: http://www.flickr.com/photos/bullionvault/

Things to consider when you buy gold.

What is the best way to buy gold?

There are a number of ways to buy gold, it is dependent on your goals and appetite for risk.  I will start with some of the more conservative ways. Probably the easiest way is to buy physical gold such as coins and bullion bars. There are a number of internationally recognized bullion coins such as the American eagle, Canadian maple leaf and South African krugerrand. By collecting easily recognized bullion coins it makes it much easier to determine their value when you go to sell them.

A concern with physical gold is storage. Having a safe way to store your gold is very important. Another popular method to buy gold is via gold certificates. With certificates your physical gold is stored by a bullion bank or other similar institution. Your gold certificate represents your ownership of the gold.

In recent years ETFs (exchange traded funds) have become a very popular and liquid way to buy gold. Precious metal ETFs trade on the stock exchange like regular stocks. These ETFs purchase gold bullion and store it on behalf of the fund holders. There are a number of ETFs that buy gold you should specifically research these if you decide this is the way you want to invest.

Next I will talk about more leveraged ways to buy gold. One method is by investing directly in producers and explorers by purchasing common shares. The more conservative method is to buy gold stock that already has a track record of production. Many of the top tier gold producers have multiple properties already mining substantial amounts of gold. Your second option is to buy juniors. These have fantastic upside IF they manage to bring a project to production. The obvious downside is if they never manage to get a mine to production.

Regardless of the type of stock you decide to buy always make sure to thoroughly research them. Check out their financials and read various news releases about the company and their management. There’s nothing worse than buying a stock that turns out to be a dog and, having it sit in your account for years wasting away.

The last way to buy gold I will touch on is the futures market. First understand that futures are probably one of the most leveraged ways to control a certain commodity. You can also get blown out of the market in a heartbeat if you use too much leverage. Gold futures are best left to people with a lot of experience and large risk appetite.

If you are interested in buying gold as an investment you may also want to take a look at silver or the platinum group metals (platinum, palladium and rhodium). All of these precious metals have industrial uses as well as being a hedge against inflation.

I hope you found this summary of various ways to buy gold helpful.



Jan 3, 2012 10:43pm
A friend of mine has been urging me to invest in gold for the last couple of years. He buys gold once a year, rather than investing into a pension fund. This article has given me a basic understanding of the different methods I could use if I ever do decide to take the plunge.
Before reading this, i had no idea what gold futures were. Thanks.
Jan 4, 2012 1:05am
Thank you for posting this article. I live in South Africa, so the price of gold is given almost hourly on the radio, just following exchange rates. What is nice about gold buying, I think, is that it is linked to the world economy and not just your local market. This makes gold buying attractive, even if you live under an unstable economy. This is really interesting and I hope to learn more about EFT gold - so feel free to share your knowledge further - ha!
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