HOW TO BUY GOLD: Traditionally, gold is considered to be a safe haven investment, particularly when there is an economic crisis such as we are experiencing now. The economic outlook around the world appears to be getting worse and as the problems continue, more and more ordinary people are thinking about investing some of their savings in gold. This is because gold has an intrinsic value unlike paper money which only has value because a government says it does. The paper itself is not worth anything whereas gold is always going to be worth something.
How can I buy gold?
There are several ways you can actually buy gold. Gold comes in many forms including gold bullion (gold bars), gold coins or even gold jewellery.
How to buy gold bullion bars
One increasingly popular method of investing in gold is to buy gold bullion or bars of gold. This can now be done online and you can also buy a fraction of a bar of gold. Read our Gold Bullion guide for more information on how and where to buy gold bullion.
How to buy gold coins
Gold coins are a very popular way of buying gold and you don’t need a large amount of money to start with. Only buy gold coins from dealers you trust. This is to ensure the coins you are buying are not fake coins and are made with pure gold. There are lots of gold coins to choose from including but not limited to the South African Krugerrand, British Gold Sovereigns, The American Eagle and The Canadian Mapleleaf. You only want to pay for the gold content of the coin and should avoid paying a larger premium because it is a rare coin or comes in a special case. For more information read our guide on how to buy gold coins.
How to buy gold jewellery
Gold Jewellery is not normally a good investment because jewellers will charge a large premium for the design and brand. You could however, buy gold jewellery from second hand shops or antique dealers. Make sure that you are only paying for the gold value of the jewellery and there is no premium on the price because of the history of the piece or who made it. You should only buy gold like this from a dealer you trust to ensure you are getting what you pay for. You can expect to pay a small premium over the gold value which is the dealers profit from the sale. There are kits available to purchase which will test the quality of the gold you are buying.
REASONS TO BUY GOLD
Since 2001 the price of gold has risen approximately 400% having just completed the eleventh year of gains. There are a lot of experts who expect further price rises during the course of 2012 and are positive about the outlook for Gold. With this in mind we have listed what we think are the top reasons why Gold ought to pass the $2000 per ounce mark this year and why you should seriously think about buying gold as part of your investment portfolio.
Gold As A Safe Haven – Traditionally, gold is purchased by investors as a safe haven when the financial markets are experiencing turmoil. With the massive debts that countries around the world are having to deal with and the serious problems faced by Europe, buying gold is seen as an alternative to holding currencies such as the Euro and the Dollar. While the uncertainty over how to resolve the debt problems continue, the price of gold is likely to rise.
Supply Is Limited – The amount of physical gold available to buy is falling. This is in part due to Chinese and Asian investors who are unlikely to sell their holdings, but also due to the renewed interest from the Central Banks who are likely to hold onto their Gold for years to come. A limited supply of gold and a reduction in the amount of physical gold available to buy should lead to a rise in the price of gold.
Inflation – Inflation means that a lot of countries have extremely low interest rates at the moment. As a result, money you have invested in savings accounts is worth less as time goes by. Investors are therefore looking to gold as a means of preserving their wealth. If central banks print more money as they try to reduce inflation, the demand for gold will increase leading to higher prices.
Increased Demand – Over the last two years, the central banks have increased their holding of gold. This is particularly true of the central banks from emerging economies who are investing in Gold as an alternative to the US dollar. During the first 11 months of 2011, central banks such as Turkey and Russia purchased 344 tons of gold between them. This increase in the demand for gold should lead to an increase in the price of gold.
There is a lot of volatility in the price of gold with big upswings often followed by big downturns. Although there is a rising long term trend you should do plenty of research before investing in any form of gold bullion to make sure it is the right investment for you.