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The Basics of Buying Gold: 5 Tips for First-Time Investors

With an awe-inspiring shimmer and undeniable beauty, gold is considered the world’s most stunning and highly valued precious metal. Used as a method to accumulate wealth across the globe for thousands of years, gold is rarer than silver, while being incredibly durable and nearly indestructible. In addition to its distinctive glimmer, gold is also unaffected by oxygen or other natural elements so this metal refuses to rust, tarnish or decay.

Gold Price

The spot price of gold is affected by supply and demand, worldwide. Centuries of mining in countries around the planet has left gold deposits more difficult to locate. In fact, the world's largest gold producing nation, South Africa, has seen a decrease in mining. This is caused by costs of mining to double as seen in North America. One ounce of gold has doubled since the mid-2000s. The scarcity of the gold makes it more valuable around the world.

Gold Bars

For investors who wish to enter the gold market for the first time, there are many options to consider when purchasing gold and other precious metals.

Why Purchase Gold?

So, why should you choose to purchase gold right now? And how do you know if this is the right time to invest?

Considered by many to be one of the most solid investments today, gold is often included as a part of a long-term investment plan for a multitude of reasons, including protection against possible inflation. Financial experts believe that gold should be a part of every investor’s portfolio diversification strategy.

By investing in precious metals, stocks, bonds as well as cash, you can see profits while minimizing losses. In addition, gold is recognized across the globe as a monetary asset, and it is accepted as a top choice for passing along to children as an inheritance.

Purchasing gold may be a bit daunting for first-timers, so these helpful tips will provide some guidance and stress-free suggestions for seamless investing:

1. Research the Current Market’s Climate

Traditionally, experts agree that purchasing gold is a reliable, long-term investment that’s considered a relatively low risk, compared to other options available today. For potential investors, it’s essential to read as much as possible on the topic and spend some time reviewing a mix of information – including analysts’ findings, financial publications, investment news, industry websites as well as reputable blogs with a focus on gold investment. All of these sources can help you determine your gold investment plan and which steps to take first.

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2. Why Gold? Understand *YOUR* Reasons for Investing

Like many individuals, if you already have a savings account and a growing stock portfolio, investing in gold is a potential option to further diversify your wealth.

Many individuals have several reasons for choosing gold, which may include: Gold is a desirable precious metal that’s always in high demand and it offers protection from inflation. If securely stored, it’s a safe way to maintain wealth over a long period of time. Also, if any unexpected civil or political issues arise, gold can protect assets, as it is portable and not difficult to hide.

3. Know Your Budget & Investment Options

What’s your budget? This is important to help you determine the type of gold investment that’s best for you and your finances.

It's important for new buyers to know that there are several options when purchasing gold, which includes: bars, coins, and jewelry.

Gold Bars:

When it comes to buying bars of gold, you'll find that most are usually 99.5 to 99.99 percent “fine.” This essentially means “pure gold.” The bars will also be stamped with the name of the refinery where they were processed. A few of these entities may include PAMP, Credit Suisse, Perth Mint and Elemetal.

Gold Coins:

When it comes to buying gold coins, you'll find that many coins that are categorized as “rare” have a monetary value in addition to their gold content. Although there are many gold coins used for investing, several popular options include American Gold Buffalo, American Gold Eagle, or Saint-Gaudens Double Eagle.

Some of these coins are considered Investment Grade Coins. A Proof Gold American Eagle that has been graded by a third party like NGC or PCGS would be considered an Investment Grade Coin. When gold coins are not considered rare, they are valued exclusively on the overall amount of gold it has, just like gold bars.

Gold Jewelry:

When considering an investment in gold jewelry, the focus should be on the overall design and craftsmanship. Be aware that any jewelry marked 14 karats or less will be below investment quality, while antique pieces may be of higher value.

Gold ETF

Gold-backed Exchange Traded Funds (ETFs) are securities designed accurately to track the price of gold. These are traded on major stock exchanges including New York. It's important to understand with a Gold ETF, you are not taking physical ownership of the gold.

4. Select the Weight of Gold

This may seem obvious to first-time buyers, but it’s necessary to keep in mind that an important part of purchasing gold is choosing the weight, as this always determines the specific price of the gold, except for rarities.

For example, gold bullion bars are normally sold by the ounce and available in several sizes, with the 1-ounce bar being popular for first-time investors. Gold coins also have standard weights as well, such as 1 ounce; 0.5 ounces, 0.25 ounces and 0.10 ounces.

Learning the industry jargon is also advantageous, as the market can be a bit confusing for beginners. New investors should know that while the word "carat" relates to the mass (or the weight) of gems; the word "karat" describes the purity of the metal.

For more information get our FREE Gold Investors Guide.

5. Identify a Reputable Gold Dealer

Throughout the world, there are numerous dealers, banks and brokerage houses that offer an array of options to purchase gold coins and bars, (while a jeweler is oftentimes the best place to visit for purchasing pieces of jewelry). It’s important to choose a dealer you feel confident and comfortable working with, so be sure to ask a variety of questions, such as how long they have been in business and the specific investment activities in which they specialize. Here are some great tips to help you avoid sketchy sellers and gold scams.

The US Gold Bureau is proud to be one of the most prominent online options for first-time gold buyers. Feel free to give us a call to speak with an investment professional, browse our site for further research to finding the best investment for you or download our free investor guide to learn more about the best ways to buy gold on the internet.

Final Thoughts & Storage Tips

Finally, safety and security are of utmost importance when purchasing gold, so be aware that it’s recommended to determine exactly where and how you will store your gold before you buy it. If you don't feel comfortable with storing lots of gold in your home, you can follow the tips of many investors and choose a vault in an off-site location, such as a depository. This is a great solution for anyone concerned with home security.

No matter what storage option you choose, secure storage is key and will provide you with the peace of mind that your investment is safe.

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