How to invest in gold in 5 simple steps
Investing in gold is a great way to diversify your portfolio while delivering a stable alternative to property and stock.
High demand means the investment remains secure long-term, and the value of physical gold is protected from inflation-induced fluctuation – nobody can predict the future price of gold but it is a traditional safeguard.
Once you understand why to invest in gold, it’s time to think about how. What are the next steps?
In this post, we’ll look at how to invest in gold – step-by-step.
Step 1 – Consider your purchase capacity
Investing in gold offers a great deal of flexibility, so the first step is to determine your purchase capacity. Whether you’re looking to invest hundreds or thousands, there are plenty of options.
For example, gold coins and sovereigns can vary from a couple hundred to several thousand pounds – so building up a collection can mean investing gradually over time. On the other hand, if you’re looking to make a larger one-off investment, you may get better value for money if you buy several bars at once.
The first step is therefore considering how much you’re looking to invest and over what time frame.
Step 2 – Find a reputable source
Legitimacy is key to making your investment in gold worthwhile. While it is illegal to reproduce coins, forgery is still a risk.
The threat of being conned with impure gold is present if you deal with the wrong source, so it genuinely pays to do your research. You should always buy from a reputable dealer who offer certificates of authenticity and connections with similarly reputable trade associations.
For example, the British Numismatic Trade Association have a strict code of ethics that members must adhere to when selling gold, ensuring purity is always as advertised and historical accuracy is thoroughly considered. The London Bullion Market Association is a reputable wholesale over-the-counter market for the trading of gold and silver, so look out for dealers who sell their ‘good delivery’ standard bars.
Step 3 – Coins, bars or jewellery?
You’ve decided how much you’re looking to invest and where to buy from, the next step is deciding the type of gold to invest in.
Coins, bars and jewellery are the three main options – although, if you’re looking at an investment in gold from a purely financial perspective, bear in mind that with jewellery, you’ll be paying a premium for craftsmanship, style but you will also have to VAT whereas investment gold has a VAT free status.
With bars, you can typically expect 24-carat purity, sealed and attractive packaging, and when buying larger sizes, the premium can be significantly lower than coins as the production costs are lower. It may also be possible to purchase some bars through your pension provider – However this is dependent on the pension provider themselves, if in any doubts check with them beforehand.
On the other hand, the benefits of investing in coins include:
1) Lower market risk as you can spread investment over longer periods
2) Collectible value; buying for gold price and numismatic value
3) Some date stamps mean coins can make great personal gifts
4) Abundance of aesthetic choice
5) Storage can be a lot easier
6) Some gold coins are Capital Gains Tax Free
As with any purchase, there are positives and negatives to consider; bullion bars can offer the highest value of gold for your budget, but coins provide potential collectability, pleasing aesthetics and historical significance.
Step 4 – Buy under current market value
As with any investment, the key is to buy low and sell high. When investing in gold, you can keep up with the latest prices through most daily newspapers, or shop around online for the latest value. Over the last quarter, the value of bullion has fluctuated from around 26,500 GBP/kg to 34,000 GBP/kg – so if it’s crucial to buy and sell when the time is right.
Alternatively, we’re happy to give you an idea of the current price over the phone – whether you’re buying or selling.
Step 5 – Ensure your delivery is insured and safe
Investing in gold brings an additional consideration to investing in the stock market – you need to be certain that the gold itself will remain safe and secure.
Even before it arrives, ensure that wherever you order from, your delivery is fully insured and your investment is protected. You’ll also need to consider how you will be safely storing your investment – will you also need to invest in a home safe or use a bank’s safety deposit box?
Although they are comparatively minor, insurance and security costs should be factored into your expenditure – but certainly worth every penny.
From considering the extent of your investment to the means by which you’ll store your bullion, these valuable steps will help you understand how to invest in gold.
There are a lot of considerations when planning a financial investment of any kind, so if you have any further questions about buying or selling gold, get in touch with our expert team today!