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How to Buy Gold

In times of economic uncertainty, investors gravitate toward gold as a means of protecting their portfolio. Gold never tarnishes and is primarily used for jewelry and money. Though many want gold, purchasing gold is not for everyone. Potential investors should review the points below to determine if it's the right choice for them.

Tips for Buying Gold

Gold is not a quick fix.

Buying gold is not a "get rich quick" scheme. Gold should be viewed as an insurance policy or a more stable investment in a diversified investment portfolio. At a minimum, you should expect to hold onto your gold for five to ten years or more to get the maximum benefit from the investment.

There are additional costs beyond the price of the gold.

For instance, you must have a secure area (preferably a vault) to store the gold. As a side note, it is recommended that you store the gold in the original, unopened packaging. The coins will remain in mint condition and retain more value over time.

Another significant cost associated with buying gold is taxes. The Internal Revenue Service views gold as a collectible instead of an investment. Therefore, gold transactions can be taxed a maximum of 28% of the value of the transaction. In comparison, stock investments are traditionally taxed at 15%.

Finally, as with any other valuable, you will need to buy insurance for the gold.

Gold is expensive.

There is no such thing as cheap gold so you shouldn't expect to find such "deals." Though it fluctuates daily depending on the standard market price, it is generally priced around $1,500 per ounce. There is a relationship between inflation and the price of gold. As inflation goes up, so does the price of gold and vice-versa.

Do your homework to find reputable gold dealers.

When looking for places to buy gold, a primary reference is The World Gold Council at http://www.gold.org/investment/why_how_and_where/. The website provides a list of reputable gold dealers throughout the world. Also, The Better Business Bureau at http://www.bbb.org/ can be a valuable resource for determining the validity of a gold dealer. One more rule of thumb when buying gold from a dealer is to avoid buying collectible gold coins unless you are pursuing gold collecting as a hobby. Investors should buy gold bullion coins.