Important Points to Consider When Buying Gold

So, you’ve contemplated buying some gold, but you are not yet 100% sure whether or not it’s the right thing to do. If you’re somewhat still in the dark as to how the gold trading business works, don’t despair – you are not alone. A lot of people who are still in the planning stages of making their first gold purchase are also wondering if they should take those very important first steps.

To shed light on a few of the most important things you need to know about before making your final decision to buy gold, we’ve compiled this short guide.

Why buy gold in the first place?

Some people have this incorrect notion that buying gold is only for the wealthy. After all, who can afford to hoard pieces of this precious metal but those born into wealth or those who come from privileged backgrounds, right? Well, not quite.

A lot of people actually buy gold for the purpose of diversifying their asset portfolio and protecting their wealth—be it large or small—from economic uncertainties. Whether the disturbance is caused by a war in some distant corner of the world or a sudden flare up of inflation at home, gold can serve as a powerful hedge against such tumults, helping people avoid debilitating capital loss.

Throughout recent history, gold has been able to retain its value even as the value of fiat currencies diminished. As a result, this metal is seen by many as an excellent alternative store of value that can help insulate individuals from the effects of economic shocks.

Paper gold vs. physical gold

People who want to buy gold have the option of buying “virtual” gold products that do not immediately or completely entitle the buyers to the physical gold. These products include various gold exchange-traded products, which receive their value from a basket of securities. These products track the price of gold in the market and are traded in major stock exchanges throughout the world. Aside from exchange-traded products, buyers can also opt to purchase shares in gold mining companies or buy gold futures contracts.

When it comes to physical gold, people have the option of buying gold coins – either bullion coins or coins with ‘numismatic’ value – and gold bullion bars. Gold bullion coins are sold in smaller weight classes, so they are usually more liquid or easier to sell. Gold bullion bars, on the other hand, are typically sold in larger weight classes, so they are ideal for people who are financially capable of buying bigger amounts of gold. Gold bars are also preferred by government agencies and central banks when buying gold for the purpose of stockpiling in their respective reserves.

Avoiding risk

Before looking for products to buy, it is important to first find a reputable dealer that you can trust with your hard-earned money. You can check a dealer’s background by looking into their terms and conditions, returns and shipping policies.  If you know of other people who have had experience buying from them or who can personally vouch for their integrity and the quality of their work, then that’s even better.

Finally, also check if the business is accredited or recognized by organizations like the Better Business Bureau (BBB), the Business Consumer Alliance, the Numismatic Guaranty Corporation (NGC), the Professional Coin Grading Service (PCGS), or the Industry Council for Tangible Assets (ICTA).