How to Purchase Gold

“You should not be asking if now is the right time to buy gold ——you should be asking how much gold should I buy”

Many financial advisors usually recommend 5% of your investment portfolio to precious metals –but gold in particular.

That is under normal market conditions but in these times of uncharted waters many advisors have raised this recommendation to as high as 20%.

This is to protect you from major economic downturns as explained in my previous article on The Importance of Wealth Preservation.

Five Different Ways To Invest In Gold

  1. Physical (Gold bars and Bullion Coins)

These can be purchased from The Perth Mint which is known as one of the 4 AAA recognised mints in the world. There are also several gold dealers and also private trading such as eBay.

There is little difference in prices and spreads so buying from the Perth Mint is often a popular choice for investors because you know the gold is as described and is recognised all over the world which is very important when the time comes to sell some of your gold.

Having the Perth Mint stamp on your gold bars or coins will avoid any issues of authenticity.

Once you purchase your Physical Gold you can store it allocated or unallocated with the Perth Mint or with gold dealers.

The problem with unallocated gold means your gold can be sold several times over so I would opt for Allocated.

There are Bank Safety Deposit Boxes where you can store your gold but if the government decided to ban the possession of gold, like what happened in America during the Presidency of Roosevelt, your safety deposit box would most likely not be accessible to you.

There are Private Gold Vaults that should give you more time to remove your gold which would be a preferable option to the Bank Safety Deposit.

Finally, you could store it yourself in a home safe or anywhere you thought it would not be discovered – buried in a box in your backyard perhaps!

  1. Gold Certificates

The Perth Mint will issue a certificate of various amounts of Gold you choose.

These Certificates are guaranteed by the Western Australian Government and are popular with overseas clients, however I would personally prefer to have the Physical Gold in my possession as for the reasons I mentioned above.

  1. Numismatics

Investing in the Gold Coin market can deliver big profits but you need the advice of an expert in this field so you would have to trust a specialised coin dealer.

I don’t believe Australia even has anyone licenced to value coins for a Superannuation Fund which means you need to seek out a Stanley Gibbons in London or a David Hall Rare Coins in America as an example.

One of keys in buying is to buy when the spread is small between the Gold Coin Value and Spot Gold.

  1. Gold Futures and Derivatives

This is a great way to buy Gold with Leverage as you can buy Gold Contracts from 10 oz to 100 oz with a small percentage of money as collateral however a small movement either way in the Gold Price can trigger your margin unless you have a reserve of cash in your account.

You can also buy Options on Gold Futures or Options on Gold Shares.

  1. Gold Shares 

There are 3 Tiers of investment when looking at Gold Shares.

Firstly there are the explorers that hold leases in land where the companies hope to find gold and might have early core samples.

Secondly there are the Companies with proven gold deposits and they might be in the early stages of production but still not earning money.

Third you have the companies actively mining gold and earning income .

One thing to look at when selecting those companies producing Gold is their actual cost per oz of production as this determines profitability.

For more on Australian Gold Shares look at previous article by Advisors contributor, Patrick Carter, on Capitalising on a Gold bull run.

New to investing? Read about How to keep your investment decisions simple.

This article does not take into account the investment objectives, financial situation or needs of a particular person or entity. Before acting on any investment strategy or advice you should first consult with your current ASIC accredited investment professional or seek out a compliant investment professional for such.