An Introduction to Gold Investment

Gold investment is a topic usually reserved for the very wealthy among us although it is something that the common people should also be interested in. The physical properties of gold make it a sought after commodity for both industrial and personal purposes, guaranteeing an ongoing demand for this precious metal.

Gold as an Investment Asset

Gold has a number of characteristics that make it ideal as an investment asset. Scarcity, fungibility, divisibility, physical durability, and its uses for industrial and personal uses being the main ones. Gold is easy to trade, transport and store, and its reputation as a store of wealth is universal. Access to online brokers and marketplaces makes it a perfect candidate for trading, and large amounts of value can be represented by comparatively small volumes. Investment in gold is as exciting as it is prudent, and is something we should all do to protect our financial wellbeing.

Gold Price Over Time

Numismatic Coins vs Gold Bullion

Investors are sometimes unsure about the choice between numismatic and bullion gold, wondering which is safest to buy, store and hold, and which will provide the best usage as an investment asset. Each of these types of gold have their pros and cons, and the choice of which one to buy often comes down to personal preference and bias. The nuanced investor will instead be asking him or herself which of these assets to buy first.

What are Numismatic Coins?

Numismatic coins are coins issued in a particular currency alongside paper notes, and are often desired by collectors based on factors such as thier historical origins, rarity and age. The art of collecting coins is in itself an interesting topic worth further exploration. For the purposes of this article however, we are primarily interested in discussing the value of the precious metal content in numismatic coins, ignoring (but not casting aside) the less tangible desirability factors of these assets. In addition, we will treat gold foil banknotes in the same way as numismatic coins for the purposes of this guide.

What is Gold Bullion

Gold bullion refers to a range of metal products that are produced for the sole purpose of being used as investment assets. These products generally come in the form of bullion bars, coins aka “rounds”. Gold bullion is normally produced in government-owned and private “mints” who may sell directly to the public or to professional brokers and dealers. Gold bullion is available in various sizes categorised by metric or imperial weight, normally ranging from 1 gram to several kilograms (metric system) and fractions of an ounce up to several pounds (imperial or United States Customary System).

How to Safely Invest in Gold

Gold investment forms an important part of any stacker’s strategy, and care should be taken to do it in a wise manner. Buy and store your gold safely to protect your wealth, and trade it securely when the time is right to maximise the return on your investment.

Buy Low – Sell High, and Other Laws of Gold Investment

To be successful when investing in gold requires adherence to many of the underlying concepts affecting investment in crypto as discussed in our previous article Megadump’s Laws of Crypto. These basic investment principles include:

• Buy low, sell high
• Don’t fall for the FOMO
• Don’t put all your eggs in one basket
• And above all – do your own research!

Remember that the price of gold can fluctuate wildly. Investors can capitalise on this volatility by buying and selling at peaks and dips. The nuanced mind would seriously consider only trading part of your stack when seeking advantage from these price swings so you never open yourself up to the threat of big losses from unforseen maket changes.

How to Buy Gold Investment Assets Online

Buying gold online should be regarded as a relatively secure and straightforward process, so long as you’ve done your research before diving in. Create an account with a local mint or broker, and give thought to your storage arrangements prior to purchasing. Taking the time to develop a gameplan will help you to act with confidence and avoid rookie mistakes. Any experience with trading cryptos or stocks should help prepare your mindset for buying and selling gold and other metals online.

It is possible to buy gold and other assets over online shopping sites such as Amazon and eBay, just keep in mind that these marketplaces are riddled with scammers, thieves and fake products. My suggestion here is to check the profile of any seller and seek certainty that they are a reputable trader or professional dealer before initiating any trade.

Live Gold Price Per Ounce

Using a Broker vs Self-Acting

It can be a wise move to use a broker to handle aspects of your gold investment. Gold brokers can buy, store and sell your gold safely, and can arrange physical delivery to you if you prefer to keep your coins and bars at home or in another location. Broker services are reasonably low priced and flexible to a degree. Look for a well-established broker with good reviews and official accreditation where available.

The downside to using a broker is that you lose some control over your transactions, and are usually subject to KYC requirements. Also keep in mind that costs involved with long term storage will affect your return on investment, and delivery times can reduce your ability to act quickly when certain opportunities arise. You might consider taking delivery of part of your stack to store at home and keep another amount in storage with your broker so it can be traded quickly when a favourable market condition arises.

Keep in mind that you never have complete control of your assets when they are in someone else’s vault. If you don’t hold your coins, you just don’t hold your coins!

How to Store Gold Investment Assets

Gold needs a secure home away from prying eyes and out of reach of sticky fingers. A safe or sturdy lockbox is a good idea for protecting your bullion, and should be bolted down, preferably into concrete for added security. The “hidden in plain sight” approach is not recommended within a home environment, as burglars and thieves will always have the notion that “all that glitters is gold”. If you live in a rough neighbourhood where theft is a daily concern, the wiser choice is to keep your gold in storage with a mint or broker.

How to Sell Gold Online

Selling gold online can be easier than buying it, as you already know that you have a real asset to trade. The complications can arise when a buyer wishes to physically view your items in person before making payment, or wishes to use a non-standard payment form. Decide in advance what payment methods you will accept any be very cautious when considering any variation from these. A good buyer will be willing to do business on your terms if they are genuine about purchasing investment gold. Never allows prospective buyers to “test” your products before buying. Instead, think about creating a video showing the product being tested and send it to the buyer before proceeding with the trade.

Verify Payment Before Delivering Gold

Verify receipt of payment in your own account before sending gold away to purchasers. Keep in mind that some payment forms may be subject to chargebacks *cough* paypal *cough*. A screenshot of a payment on a phone can easily be faked. Let the buyer know you will make delivery once your bank confirms the transaction or their transaction is confirmed on the blockchain if they are buying you with crypto.

The Risks of Gold Investment

As a valuable asset, gold attracts the eyes and sticky fingers of unscrupulous characters as well as genuine investors. You need to be aware of the risks presented by fake deals, fake dealers and fake friends. Always conduct thorough research before making any deal. Here’s a few risk factors to keep in mind when investing in gold:

• Unfavourable market fluctuations
• Buying or selling at the wrong time
• Falling for FOMO and hype
• Delivery delays and lost or stolen packages
• Brokers getting robbed, hacked or just going rogue
• Fake gold products and listings
• Dodgy traders and scammers
• Data miners and data brokers
• Identity theft
• Unforseen political and governance changes

Any of these factors can put a real downer on your day but all can be mitigated with the proper and serious consideration. Pay attention to the details, terms and conditions of every trade. If you leave anything to chance, you leave yourself open to exploitation and accidental loss. However, if you think, act and invest wisely in gold you will be rewarded with the knowledge that you have purchased a timeless asset that will never rust or rot, and will not disappear if your computer dies or “someone” mysteriously shuts down the internet or power grid.

Summary

Gold investment is a human activity that anyone can learn about and participate in. While historically being the domain of the very wealthy, gold investment is now viable for investors from all walks of life. Gold brokers and online marketplaces provide access to a world of convenient trading and storage options. Despite the significant risks involved with this type of investing, gold is an asset that can withstand the test of time, providing long term wealth security and gains. By following the principles in this guide you will be well placed to start adding gold to your investment stack.