There are many reasons to get started investing in gold. Maybe you are worried about the unstable economy – historically, gold has been the material that backs up currency, and it continues to have value even if government currencies fail. Or maybe you just want to diversify your investment portfolio. Converting a portion of your assets into gold is a way to ensure that you have one fairly stable investment. However, buying gold isn't a completely foolproof plan – you still have to go about it the right way. Take a look at some mistakes to avoid when buying gold.
Buying For Historical Value
One common mistake that many new investors make is choosing coins for their numismatic, or historical value. While it's fun to fantasize about finding that rare coin that's worth thousands or tens of thousands of dollars, a safer bet is to choose coins for their melt value – in other words, the value the coin would have if it were melted and sold just as metal. While some historical coins may be very valuable to certain collectors, they're not a great investment if you envision eventually selling them to a dealer. Often, they don't have much more melt value than the face value of the coin. For your gold purchase to be a solid investment, you should be able to sell to a dealer for a profit should the need arise, not hunt for a collector that's looking for that specific coin.
In North America, some of the most sought after coins with high melt values are the American Eagle, a 22 karat gold alloy coin, and the Canadian Maple Leaf, a pure 24 karat coin. To compete with the Maple Leaf, the U.S. mint also offers a 24 karat coin, the American Buffalo, which is another good choice. You may also want to be on the lookout for Australian Gold Nuggets and South African Krugerrands.
For obvious reasons, the best investment strategy is to buy gold for as low a price as possible and then sell it for as high a price as possible. But it can be easy to overpay for gold if you're not familiar with buying it. The price of gold fluctuates, so it's a good idea to watch the prices for a while and see how they rise and fall, so that you can recognize a good price when you see one.
Of course, each dealer will have their own markup on the price of the gold pieces that they're selling. You'll need to shop around to find the one with the best prices.
Buying From Cold Callers
When you want to buy gold, you should seek out a dealer yourself. Be wary of anyone calling and offering to sell you gold over the phone. Telemarketers sometimes use high-pressure sales tactics or scare tactics to convince you that you need to buy gold now, and that they are your best chance. They may say that they're offering a rare, limited-time deal, or claim that an economic collapse of some sort is imminent and that you need to be prepared. Truthfully, outfits that sell gold by phone tend to charge higher commissions than other dealers, so they don't want to give you too much time to shop around.
In some cases, you may not ever even see the gold that you'll pay for. Some fraudsters may claim to be holding it in a vault for safekeeping. However, you have no way of knowing that the gold even exists. Sometimes it doesn't, and you could end up paying for gold pieces and even storage fees for nothing at all. Don't be duped. Any dealer that cold calls you and doesn't give you time to think about it or compare prices with other dealers is probably not one that should be trusted with your money. Reputable dealers don't need to make cold calls – their customers come to them. Stick with dealers that you've personally researched and contacted yourself.
Gold can be a valuable investment if you go about buying it the right way. Do your research first or seek advice from a financial adviser. If you don't know where to start, check out a gold dealer like Rocky Mountain Coin Inc.Share
18 December 2015
When I started thinking about my life, I realized that I was spending a lot more money than I should be every month on little extras. I wanted to streamline things, so I decided to start focusing on getting my finances in order. I started looking around my house, and I was pleased to discover that there were more than a few things I could sell for a little extra cash. I put them online, and I was amazed to see how quickly they sold. After selling some things, I was able to get my finances in order, which was a huge relief. This blog is all about getting your finances in order.