“All that glitters is not gold,” wrote William Shakespeare in The Merchant of Venice. The quotation is meant as a warning that just because something is bright and flashy isn’t a measure of real worth.
Ironically, the statement also has meaning for eager investors buying gold.
When buying gold, every investment option isn’t equal. There are plenty of unscrupulous sellers willing to take advantage of people who want to own gold, so purchasing gold from a reputable company is key.
Here are five things you have to know before making your first gold purchase.
Stocks are not actual gold
Many financial advisers will suggest gold mutual funds, ETFs and mining stocks instead of purchasing actual gold. The Federal Trade Commission notes gold stocks and mutual funds may offer convenience and liquidity. However, any gold stock or mutual fund investment carries inherent risk and could drop in value regardless of the current gold price.
IRAs can hold actual gold
You are not limited to gold stocks or ETFs within an IRA. You can acquire physical precious metals you own and control. This might be a little tricky to navigate on your own, so make sure to find an experienced gold dealer and know the right questions to ask.
Nothing beats the real deal
An article on buying gold by Forbes.com states, “Buying bullion or gold coins is the most direct exposure to the physical asset an investor can get.”
For anyone purchasing gold to use as currency or for bartering in the event of a financial emergency, only physical gold is viable.
Gold is a commodity, which means it’s traded constantly on the world market. It’s fairly simple to find the current spot price of gold from a website like goldprice.org. There are many variables when buying gold, so make sure to find a trustworthy company rated high from the Better Business Bureau.
It’s not the lottery
Buying physical gold is not a get-rich-quick proposition. The price of gold can rise or fall quickly. Investors should consider gold as a long-term investment or as a means to hedge against inflation.
Best ways to buy
When purchasing gold, it is important to buy from an experienced company with an established reputation. The U.S. Mint produces gold coins as do other countries and are available from most reputable coin dealers. Some of the more common are the Canadian Maple Leaf, the Australian Gold Nugget and the South African Krugerrand. Most dealers also offer gold bars or ingots.
One consideration of owning gold is that you need to make sure it is secure. The FTC recommends that you insure your gold and that you keep it in a safe or a secure offsite storage facility.
Buying gold doesn’t have to be confusing and it shouldn’t be a hassle. You can order information online, attend a local seminar or schedule a complimentary consultation to answer all your questions before purchasing the oldest currency of all time.