Research & Blogs
Purchasing Gold: 6 Things to Look for
When investors consider purchasing gold to add to their portfolio, they must first understand what to look for among a dizzying array of options. While gold has been around for thousands of years and is regarded as one of the most sought-after natural resources on earth, there is still some uncertainty regarding its acquisition. Investors and investment portfolio managers have long recognized the undoubtedly strong store of value gold presents. They also are aware of gold’s historic resilience against the ever-present threat of inflation. Despite this, there is still much confusion and uncertainty regarding pulling the trigger on a purchasing gold.
It is understandable that with a wide range of types of gold to choose from, how can one know they are buying the ‘right’ kind of gold? Also, how can buyers be sure that they are buying authentic, pure gold and not partial gold that some other type of metal has debased? As far back as the first day when the precious metal was mined from the earth’s surface, facilitators and refiners of gold have varied the methods they form, maintain, and store it. These varying methods create numerous options to choose from when navigating the buyer’s market for purchasing gold. Although the market has created a well of options, the process of selecting the best gold for investment remains largely a mystery. Digital gold solutions like Gilded have gone to great lengths to demystify the gold buying process and make it accessible and seamless. However, the traditional avenues for acquiring gold still exist and should be understood at the very least. While seemingly daunting, there are several ways to cut through the noise and find the perfect gold investment for your portfolio.
Types of Gold
Digital Gold – Digital gold is one of the more recent options to emerge in the gold buying market. It offers the same benefits of physical gold ownership, minus the typical drawbacks of storage, transportation, and a cumbersome liquidity process. You own physical gold outright when purchasing digital gold, not a gold equivalent certificate. With just a few clicks, you can instantly buy real physical gold and, at any time, sell it, send it, or pledge against it. Platforms like Gilded take a place at the vanguard of the digital gold market by creating a solution that grants easy access to real 999.99 pure Swiss gold at any time, from anywhere in the world.
Gold bars and coins – Traditional and simple, gold bars are comprised of any shape and must meet a minimum purity requirement to be sold from reputable refiners. Purchasing gold in traditional bars comes with the caveat of finding a means for storing them. Typically, when purchasing gold, that involves paying a banking or vaulting facility to store the gold safely.
Jewelry – Some investors elect to keep their gold holdings in the form of jewelry. Like owning physical gold bars, there are drawbacks regarding logistics. Firstly, jewelry is sold at a higher price point than raw gold offerings by retailers. Therefore, you have the same issue of maintaining the gold physically with the added obstacle of finding jewelry at a reasonable price. A lot of gold in investment portfolios comes through generational inheritances passed down from other family members.
Futures – Gold futures are another option investors consider when looking to add gold to their portfolios. They exist as contracts that are traded on exchanges. Futures are unique in that they relate to the price of gold on a predetermined date. However, like with ETFs, investors do not own the physical gold outright.
Gold ETFs – These are shares in an investment fund. Gold ETFs are traded through the stock market or a brokerage. Investors acquire gold ETFs digitally and do not deal with storage, insurance, or transportation fees. However, you are not purchasing gold and do not own physical gold with ETFs, merely a physical gold equivalent. You cannot always elect to transfer your gold ETF into physical gold.
When purchasing gold, determining the purity level of the gold you buy is critical when circumventing the gold marketplace. Gold can have drastically varying purity levels depending on where purchasing gold. The purity level of gold can have significant implications on its price point. For example, gold that is 100 percent pure is referred to as 24K gold. Any number that deviates below 24K means that it is not entirely comprised of pure gold. If you have a bar of gold that is approximately 22K pure gold, roughly 90 percent of that bar is pure gold, and the other approximate 2 percent is comprised of another, less valuable kind of metal.
Cost Per Gram and Other Charges and Fees
It is essential to learn the current price per gram when purchasing gold. Many reputable websites closely monitor the spot price as it shifts up and down. Some of the most notable institutions that offer updates to the spot price of gold per gram include APMEX, JM Bullion, and BullionVault. You can easily compare the listed spot prices on multiple platforms to see how they stack up. Regardless of the platform, the prices should be similar, if not identical. Putting in the research and comparing the prices from outlet to outlet will yield peace of mind knowing that you are paying a fair and accurate price for the given amount when you are purchasing gold.
When purchasing gold for a portfolio, it is also crucial to identify any associated fees attached to the product. This is not always readily transparent; therefore, considerable due diligence and research are required on the investor’s part. Being sure you are working with a reputable refiner or retailer is paramount when navigating the gold market. These additional fees are also frequently tied to the level of purity of the gold. When purchasing gold in the form of jewelry, some pieces comprise more than just pure gold. This kind of debasement of the pure gold composition adds more charges for intricate jewelry pieces. Yet another reason why jewelry is suboptimal when purchasing gold for investment solely.
Having ready access to liquid assets is crucial. However, not all forms of gold ownership offer immediate access to liquidity, allowing you to convert your gold investment into cash when you need it. That’s why it is crucial to understand the market for the type of gold you buy and be cognizant of the process of liquidating it when you see fit. Some modes of gold ownership lend themselves to quicker liquidity than others. For example, purchasing gold bars in a banking or financial institution vault creates a few headaches when it comes time to convert your gold assets to cash. Withdrawing the gold from the institution is an inconvenience in and of itself. After, the investor must resolve to find a suitable gold dealer and keep close tabs on the current spot price to ensure they are getting the full value of the gold they intend to sell. On the other hand, digital gold investors within the Gilded solution can instantly sell their gold on the same platform they bought it from, 100 percent digitally. This method alleviates the cumbersome process of having to retrieve your gold and physically shopping it around to find the best buyer.
Storage & Insurance
Buying gold also means finding suitable ways to store it and maintaining its value by protecting it. Depending on the type of gold you buy, different storage and insurance measures may be required or necessary. For example, if you are purchasing gold bars or jewelry, you’ll need to find means of keeping it safe, either in a safe that resides in your home or a safe deposit box or vault in a financial intuition or bank. This option comes with typically associated storage fees. Having a proper safe is necessary for those who store their gold at home to protect their investment. Although, in terms of insuring your gold at home, most homeowners insurance plans do not fully cover the value of precious metals. Even if you elect to store your gold in a safe deposit box, you should consider buying an independent insurance policy for that gold. The FDIC does not insure contents or bank-provided insurance adequate to cover losses on even minimal gold holdings. Experts agree that keeping your gold in an authorized depository or vault is the safest option for your gold. These facilities usually provide insurance at a cost and give owners peace of mind knowing that their gold is less susceptible to burglary. Digital gold, however, requires none of the storage and insurance options. That’s because digital gold is stored and insured for you in highly secure vaults all around the globe. Digital gold offers the ultimate convenience of allowing you to retain the value of your gold without the hassle of having to store and insure it yourself. The title of gold ownership is entirely digital and can be sold or moved at the tap of a button.
Determining the source of the gold can also play a role in the investor’s decision when purchasing gold. For some gold investors, ensuring the moral and environmental integrity of the gold they buy is paramount. There are also many kinds of sourced gold. Eco-friendly gold, ethical gold, recycled gold, and sustainable gold differ and are only available through certain providers. It is up to the investor to do their due diligence in investigating where their gold dealer sources their gold and whether the gold they provide is consistent with their values. When purchasing gold, verifying the source of the gold you are buying goes a long way in providing peace of mind to investors. By knowing the source, investors can abstain from mining practices that exploit workers in hazardous conditions or practices detrimental to our environment through harmful extraction methods. While prices may fluctuate depending on the source of the gold you are purchasing gold, buyers can have transparency as to exactly where their investment came from and feel more at ease with their decision to buy. Some gold solutions like Gilded deal exclusively with LBMA good delivery gold bars. These bars are strictly bound to ethical standards and are sourced from only reputable refiners in Switzerland.
There are numerous ways to invest in gold. The traditionalists generally lean towards physical gold ownership in bars, bullion, and coins when purchasing gold. However, the digital age has ushered in new generations who are more interested in convenience and accessibility when maintaining their portfolio. For this reason, digital gold alternatives like Gilded are emerging to meet that demand. Investors use their best judgment to determine which investment method suits their portfolio best. Whichever method you choose, knowing what to look for is key to ensuring you get the most out of your investment—intending to diversify your portfolio with one of the world’s oldest stores of value.