A Beginner's Guide to Investing in Gold Bars
Gold has always been used in transactions of buying and selling since time immemorial. It is considered to be an international monetary and financial asset. Paper currency has replaced gold to a great extent, but the latter still holds a certain distinction among all the precious metals.
Scores of people invest in gold and silver bars and coins, mainly in an attempt to diversify risk. It is usually sold when the economy becomes weak. Every gold bar has its weight, manufacturer, size and a registration number stamped on it. First time buyers are advised to make a note of it before indulging in any transaction.
Tips and Tricks to Invest in Gold
One should be clear about how much to invest in gold bars. Weigh all your other investments and come to a conclusion. If you plan to invest 10% of your money, then you should probably invest 1%-2% in gold.
It is always better to decide a safe storing place before you buy bars of gold. Either arrange for a safe deposit box to keep at home or store it in the safety of your bank.
Choose the type of gold bar to buy. Some of the options include Kilo bars, 10 ounce bars, 1 ounce bar, biscuits as well as coins.
You also need to undertake an extensive research about investing in gold. Just like the stock market, there are daily fluctuations in the price. Many factors contribute to the changing gold prices. Once you're aware about how the gold market fluctuates, you can set aside a certain month when the gold may be at its lowest price.
Like all commodities, gold prices are also influenced by forces of demand and supply.
Find a good dealer who will help you through the process. The central bank of every country has reserves of gold. Buy the gold through check or cash. Keep the receipt safe. Other than that, investors also have an option to buy gold from the American Eagle Gold Bullion Coins. They are the only dealers whose weight, content and purity are recognized by the Government of America.
Check the 'Assay Certification' on the gold bars.
Make sure the packaging is tamper proof, it should remain intact during transit.
You also have to look into the tax parameters while selling gold.
There are multiple ways in which you can invest in gold. Mentioned below are a few that you can consider.
Bars and Coins
Bars are the most common and traditional form of buying gold. Banks, branded retail stores, and local stores sell bars and coins of different denominations. They have a 'hallmark certificate’ imprinted on them.
You can buy jewelry from local or branded stores. Purity is a concern because other metals are also mixed with gold to make it stronger. You need to buy gold, which has a 'hallmark certificate’ stamped on it.
Gold Exchange-traded Funds (ETF’S)
Through this option you don’t have to be concerned about purity at all since you will not be dealing in gold in the physical form. Through gold ETF, you can purchase gold electronically in demat form. 1 unit is equivalent to 1g of gold. However, for this, having a demat account is a prerequisite.
This is another way to invest in gold, which cuts the risk of storing. Banks issue gold certificates for gold which is allocated (fully reserved) or unallocated (pooled).