Whats the best advice to start investing and buying gold?
Whats the best way to start? Is it better to buy bullion bars or coins? Does it matter what kind of coins? For example, Gold American Eagles over American Buffalos?
Why does the face value of an American Eagle 1oz. is $50 when gold is worth almost $900, and the same thing with the rest of the American Eagle coins?
- Aron RLv 41 decade agoFavorite Answer
As with any other investment, you'll need to look at this around your current and expected life circumstances: do you already have money in the bank, 3-6 months worth? Do you have high interest debt that you should pay back before making investments? Are you saving for any near term large purchases, like a car or house? Are you well insured against most common hazards, with car insurance, homeowners or renters insurance, health insurance, disability insurance, and life insurance (if you have dependents)? All of these core considerations may take precedence over gold - or any other - investments.
Most investment advisors suggest that one's investments in precious metals - in all forms, including the stocks of the companies that mine them, be kept to 5-10% of one's investable assets, and that's not a bad guide for most individuals.
Given that, in part as noted in the wisdom of some of the other answer-ers to this question:
* Coins have some advantages over bars, primarily because coin buyers usually don't require that their gold content be re-evaluated (assayed) when they are bought and sold.
* You might consider any of the following in your mix of gold investments:
1. A small amount of physical gold, usually in the form of coins purchased from bullion dealers (monex.com, kitco.com, blanchardonline.com, etc.), coin dealers, or from trusted sellers on eBay.
Some foreign buyers only want .999 fine gold coins, and only some American coins, like the Buffalo coins, offer that fineness. Other US gold coins - with the same amount of total gold content - may be only .916 or .900 fine (91.6% or 90% gold, with the rest of its metal content consisting of an alloy metal like copper or silver) for instance, and for that reason might be in somewhat less demand from outside of the US, although a large fraction of US buyers may not care one whit about this. But for the most part, any well-recognized gold coin, from a US Eagle or Buffalo to a Canadian Maple Leaf, Austrian Philharmonic, or South African Krugerrand, to name just a few of the main options, is a reasonable choice.
2. Certificates for overseas storage of gold, from companies like GoldMoney.com or the Perth Mint.
3. Shares in Exchange Traded Funds (ETFs), like Street Tracks Gold Shares (ticker symbol "GLD"), that represent a part ownership of a big pile of securely-stored gold and track the gold price. These trade just like stocks.
4. Shares in mutual funds that own stock in companies that mine gold.
Here's one reputable mutual fund complex with two gold-oriented mutual funds that allows you to do so with just $100 up front and $50 a month:
That way, you won't try to "time" the market: if gold mining companies' shares drop, you'll buy more shares, and if they rise, you'll buy less, until you've allocated whatever amount you wish. As well, they can do the work of picking stocks which, if you haven't studied the sector, might take you some time to learn to the point of comfortably making your own investment decisions.
Here's a comprehensive list of other gold-oriented mutual funds available to US investors:
5. A diversified portfolio of individual companies that explore for, build reserves of, or mine gold. To do this, you'll need to do a considerable amount of homework, or find a trusted investment adviser who knows this sector well.
Before buying *any* gold, figure out why you want to own it. What makes the gold price go up? What factors (like increases in the amount of central bank sales of gold, or increases in the value of the dollar against other currencies) are often - at least recently - associated with it going down?
If you're buying physical gold as disaster insurance, for instance, against the possibility of widespread bank failures or hyperinflation, you'll need to figure out a) whether you can stand holding it if its price should decline, even sharply, in the next couple of years and b) where you can safely store it.
If you're buying gold as an investment, you'll want to have some idea about why you're buying it now, what prices you'll sell at, why and when you expect those prices to be realized, under what specific circumstances you'll consider selling, and how much you'll sell. Note that when you buy and sell anything - gold or stocks - you'll take a haircut when both buying and selling, in the way of commissions and buy/sell spreads, so you might need to make 5-15% on various forms of gold-related investments just to break even.
Some background: we do know that gold went from $35 per Troy ounce in 1973 - when its price stopped being fixed by the US Government - to (briefly) $850 in 1980, down to around $250 at a couple of points around 2001-03, up to $1050 recently, and is around $880 today, as of this writing.
These aren't inflation-adjusted prices; roughly speaking, the $850 peak in 1980 corresponded to about $2,200 per Troy ounce in today's dollars, which means that the gold price today is less than half the 1980 peak.
We also know that, over extremely long periods of time, gold has roughly retained its purchasing power in goods, but that there are periods, sometimes long ones, where it is a very good investment and periods where it has been a very poor one. Those experiences even vary by country, as in cases where a nation's currency rapidly loses value due to capital flight, high inflation, or even hyperinflation.
Finally, we know that the gold price is volatile: even during its run-up from $35 to $850 over a 7-year period in the late 1970s, there was one case where it fell from $200 to $100 within about a one-year period from 1973-74, if memory serves.
As for the best time to invest, you might read what investment "experts" think about what will happen to the gold price and the prices of individual, or indexes of, gold-oriented stocks by continuing to read articles at these websites:
(see the links in the "Contributed Commentaries" section, about mid-way down the home page)
(see the links at top, under "Gold Silver $$$")
But be advised: there are as many opinions as experts, and they are often contradictory :-). For that reason, you might consider making your purchases of physical gold or gold stocks gradually, spaced apart by a month or two over a longer-term period. Once again, setting up automatic monthly dollar-cost investing into a gold-oriented mutual fund is a terrific automatic way to do this. That way, you aren't tempted to buy more when prices are rising and stop buying, or sell out of panic, when prices are falling.
Finally, as someone else astutely observed, the face value of a coin is pretty much irrelevant to its gold content or the metal value of that content.
There is one exception: some coins are legal tender at their face value, and this gives buyers some rather far-fetched downside protection. For instance there are some Canadian $100 legal tender gold coins, with about 50-60% gold content, that are worth about $200 in gold melt value today. If the price of gold were to plummet more than 50% from present levels (i.e. below about $400-$450 per Troy ounce), those coins would still be legal tender at $100 Canadian dollars, so you would have protection against these coins falling further in value, if gold were to then fall even further below that level. But that's a somewhat improbable scenario, and is mentioned here mostly for completeness.
- Anonymous5 years ago
I’m aware that this question is over 6 years old, so i think an updated answer is in order for all those finding this through google in 2014.
When investing in Gold there is one MAJOR thing that everyone must be aware of. And that is what exactly applies to government seizure, when they decide to make another round of seizing all citizens Gold. And i say this because they have done it once in my lifetime already, and it appears that they are nearing a second go round with it very soon.
what is seizable gold according to the governments laws and regulations???
*All gold coins (aka collector’s assets printed by government) because you are never the true owner of any government issued coin or currency, you are simply the temporary holder of it, until they decide that they want it back...said simply.
*also all pure gold bullion (aka asset class pure gold bullion) because the government views this class of gold as something that they do not want the people to possess. since after all...gold is power. its the currency of kings and gods, and has stood the ultimate test of time over thousands of years. and still will buy your about the same amount today, as it would when the pharaohs were ruling the land.
my solution, and what kind of gold i personally recommend and invest in??? Is 999.9% pure gold bullion, that has been pronounced currency grade!!!! This is the one loophole i have been able to find, to possess my own gold, in any amount i wish, and it not be seizable by the government at any point in time. which is ultimately what i care about here.
ill provide the link tot he company that i get my Currency Grade Gold Bullion from, for any passerby’s seeking that info themselves.
God Bless :)
- 1 decade ago
coins would probably be a better choice, they're easily divisible and have some numismatic value. some, like GAEs will carry a premium precisely because that. a bar is just a bar, but it would be easier to store and transport if you happen to be Mr. Moneybags. the only thing that really matters is that it is gold and is commonly recognized as such.
the face value isn't important (unless you want to mess with the IRS), it's just what as assigned to it by the act that forced the mint to make them.
remember, however, the value of gold, and anything else, is only whatever the price someone else will pay for it. keep that in mind.
yeah, just ignore everything I said, the megapost wins
- SDDLv 71 decade ago
Coins are a bit easier to store and you don't have to have the assayed when you sell. The more common the coin, the better. PLEASE treat gold as a portfolio hedge. Not more than 10% of your assets.
You can also consider gold mining stocks. Though they do not move in lockstep with metals prices, they do pay you a dividend. Coins, obviously, do not.
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- Anonymous1 decade ago
Pure .9999 fine gold bullion is among the purest gold bullion bars available to investors today, and it is convertible into pure one-ounce Vienna Philharmonic gold coins with no commission at current market rates
- Feeling MutualLv 71 decade ago
Everything else is fluff.