5 Tips for First-Time Investors Buying Gold


Jake Basil 2017-03-30 10:00:00

The way the market is performing right now it can be rather tempting to dive in. It seems like nearly every day the Dow Jones or the Toronto Stock Exchange is recording a new all-time high. With stock valuations constantly surging, this coquettish behaviour makes you want to ask: why would you bother putting your money into gold?

No matter how the stock market performs or how healthy the global economy is, it is always a fiscally prudent step to invest your money in the yellow metal.

Gold has a wide array of functions and uses: everything from a hedge against inflation to an investment strategy, from a way to shield your money from a financial crisis to industrial use. The precious metal is money in itself, and has been for thousands of years. You could say that gold is in a 5,000-year bubble.

For first-time investors, it can be confusing and perhaps even overwhelming to park your fiat money in gold. Do you purchase physical gold? Do you buy gold ETFs? What about mining stocks? If you're a novice investor then the best solution is to take it one step at a time and buy physical gold first before you start to trade gold stocks, mutual funds and ETFs.

Here are five tips for first-time investors buying gold:

Only Buy North American Coins at First

Until you are a seasoned investor, it would be wise to only buy North American coins and bars. The American Eagle and Canadian Maple Leaf gold bullion coins are top-notch choices because they are easy to buy and sell. You can either buy from the Mint or from private bullion dealers.

Always Compare Prices Across the Web

In order to get the best prices, it is important to compare prices across the Internet. Some dealers will charge a premium of five percent with expensive shipping, while others will charge a premium of just one percent with free shipping over a certain amount.

Moreover, you must also check the reputation of the dealers you're interested in buying from. This can easily be done by perusing online reviews, reading out gold investment forums to garner advice and looking for guarantees on their websites.

You can also purchase from a financial institution, but there is a minimum amount you have to buy in order to get your hands on their selection.

Purchase One-Ounce Coins or Bars

This may be hard, but it is the best way to acquire physical gold: buy one-ounce coins and bars.

When you are buying gold, you will be presented with a variety of denominations: one-ounce, half-ounce, one-quarter ounce, one-tenth ounce and grams. The problem with this is that you'll pay a significant premium for these other gold coins and bars. For instance, if an ounce of gold costs $1,000 then you'll come across half-ounce coins that cost anywhere from $500 to $600.

It can be hard when you don't have a lot of money to spend, but if you are able to then purchase the entire ounce to save yourself some money.

Don't Acquire Rare Gold Coins

Unless you are a bullion expert and have the time to perform an exorbitant amount of research, you should avoid buying rare coins. Perhaps as time goes by and you have acquired a great deal knowledge about precious metals then you can buy rare coins. Until then, stick with the basics.

Store Your Gold in a Safe Place

A common concern that all types of gold bugs have is where to store their precious metals. Although a bank safe seems like a logical place, many gold investors lack confidence in a financial institution's protocols and fear potential government policies restricting gold.

The best thing you can do is to invest in a hefty, durable and sturdy safe. You can also purchase products that can hide your gold. For instance, many gold websites sell books, particularly ones by Keynesian economist and famous gold hater Paul Krugman that have space inside to hide this investment. Another good idea is to never tell anyone that you have gold at home.

Despite the commodities rout taking place, gold is still a great investment, particularly at today's prices. Even though it has been uttered over the last several years, gold will inevitably skyrocket once inflation and price inflation soar through the roof. You may not be able to get on the ground floor right now, but you can still transfer your loonies into gold to protect your wealth.

Back to list