Investing 101: How to Invest in Gold

Investing 101: How to Invest in Gold

When the average person looks at investing their spare income, they tend to think of traditional financial products like stocks and bonds, or more ambitious investments like real estate. However, one investment which has been available for thousands of years and still plays a vital role in global finance is precious metals.

Investing in precious metals doesn’t require building a vault in your basement or burying treasure chests in your backyard. While gold ingots and coins have been sought after and collected throughout human history, today’s precious metals market offers fully modern and highly accessible gold investment options for even small investors.

How did gold first become valuable?

The first elemental metals identified and used by prehistoric humans are known as the metals of antiquity. There are the seven metals of antiquity:

  • Gold
  • Silver
  • Copper
  • Lead
  • Tin
  • Iron
  • Mercury

These seven elements served as the foundation of humanity’s early understanding of metals, which led our ancestors to assign value to them according to their appearance, scarcity, and usefulness.

As gold is a very soft metal, it was used to create the earliest forms of money, as well as for making jewelry and art objects. Gold is also very resistant to corrosion—another quality that added to its value over time.

Of the seven metals of antiquity, gold would go on to become the most distinct symbol of wealth and power, and has been used to mint coins and bars since the 6th century BC.

Why should I invest in gold?

Gold has grown in popularity as an investment item, especially in the last ten years or so. Here are some of the reasons why gold is such an attractive investment:

  • Gold maintains or increases in value over generations; it is a prominent inheritance item found in a Last Will and Testament.
  • Gold typically rises in value during times of high inflation when the US dollar loses value.
  • Gold is considered to be one of the safest investments during periods of political unrest and global uncertainty. Gold usually outperforms other types of investments in volatile times.
  • The demand for gold is rising in developing countries where private wealth has slowly increased over the last two decades, further adding to gold’s projected future value.

How do I invest in gold?

Gold is by far the most popular precious metal people choose to invest in. Here are some of the ways you can add gold to your portfolio.

Physical gold is most commonly purchased as coins and bars. One popular choice with gold investors are American Eagle gold coins, which are made from a 22-karat gold alloy that includes silver and copper to make the coin more durable.

American Eagle gold coinAmerican Eagle gold coin

The American Eagle is sold in four different weights: one-tenth ounce, one-quarter ounce, one-half ounce, and one ounce. The United States Mint guarantees the quantity and quality of the gold in these coins. American Eagle coins can be purchased through many banks, precious metal dealers, and brokerage companies. The US Mint has a locator tool for authorized sellers you can use if you decide to purchase one or more coins.

A newer and lesser-known gold bullion investment option is the American Buffalo coin. This coin is made from 99.99% pure 24-karat gold, and is styled after the Indian Head nickel first minted in 1913.

American Buffalo gold coinAmerican Buffalo gold coin

The American Buffalo coin is sold in the same four weight classes as the American Eagle coin.

Another popular gold investment option is the Canadian Gold Maple Leaf. These coins are made of 99.99% pure 24-karat gold, and are popular with investors in the US and Canada.

Canadian Gold Maple LeafCanadian Gold Maple Leaf

The Canadian Gold Maple Leaf can be found in the following weights: one gram, one-twenty-fifth ounce, one-twentieth ounce, one-tenth ounce, one-quarter ounce, one-half ounce, and one ounce.

Gold bars are also available for purchase through precious metal brokers. Gold bars can be found in much larger weights and sizes than gold coins, but take less physical storage space than coins do on an equal weight basis.

You can buy tiny one-gram gold plaques, or go all the way up to one-kilogram gold bars. Several options exist between these two weights to allow for gold investments of varying amounts.

How do I store my gold?

People have different comfort levels when it comes to where they choose to store purchased gold. In the end, there are really only two viable choices:

  • Store your gold in your home
  • Store your gold in a third party’s secure location

Some people are uncomfortable with the idea of keeping their valuables anywhere else but their home. If you are going to store your gold at home, consider protecting your investment by keeping it in a home safe.

Home safes come in a wide variety of types and sizes. A safe is quite heavy, which should be taken into consideration when deciding where to place it. A relatively small 1.3 cubic-foot safe can easily weigh over one hundred pounds without any contents in it. Many floor safes can also be bolted down, making it even more difficult for a burglar to remove one from your home.

Wall safes are typically more expensive than floor safes, but they can be creatively concealed, making them very difficult for robbers to discover during a typical burglary.

If you are more comfortable keeping your valuables in a third-party’s secure location, consider storing your gold in a safe deposit box at a bank.

How do I sell my gold?

There may come a time when you want to sell some or all of your gold. Some US Mint authorized sellers will buy gold back, particularly gold coins. There are also a large number of internet dealers that will purchase gold—just make sure to do your due diligence and research any online buyers for legitimacy and customer reviews before agreeing to sell to them.

Selling gold is just like selling any other valuable object. You should have a very good idea of what the amount of gold you wish to sell is worth. When possible, consider selling your gold locally to an established merchant. Goldsmiths, jewelers, and coin collectors are all potential buyers, and dealing with a local buyer can make it easier to clear up an issue related to a sale. Selling locally also removes any expensive shipping charges included in an online sale.

Finally, if you think you have gold in a format that would appeal to a collector, you could try selling it on an auction site like eBay. Again, as with any other valuable object, be sure to follow the site guidelines and look up the buyer’s reviews before finalizing a sale.

Gold is an excellent modern investment

While the history of gold goes back to our earliest days, it remains a vital and valuable commodity for modern investors to add to their portfolio. Gold is relatively immune to the economic erosion caused by rising inflation rates, sluggish stock markets, and geopolitical turmoil.

Best of all, you don’t have to be a millionaire to start investing in gold. There is a great variety of physical gold products on the market, making it easy and affordable to begin adding gold to your personal wealth.

Aaron Axline

Marketing Writer at LawDepot
Aaron Axline is an author, technology journalist, blogger, and knowledge management expert based in Edmonton, Canada. He likes cats.

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