There are five primary categories to choose from when investing in gold: physical gold, gold IRA, mining stocks, gold futures, and gold ETFs.
In this article, we will primarily focus on how to buy physical gold. However, if a gold IRA aligns better with your investment goals, please browse our list of top-rated gold IRA companies or view other articles. These resources provide valuable insights into the gold IRA market and explain the steps you need to take before beginning a gold investment journey.
What is Gold Purity?
Regardless of the type of gold you're interested in, the most significant factor affecting investment value is purity. Gold is inherently soft and scarce, which means it’s often mixed with other metals for durability and longevity. These metals are less expensive than pure gold, allowing manufacturers and jewelers to create cheaper products.
Always inquire about the gold's purity rating before making any large purchases. The rating quantifies the actual amount of gold present in the bar or coin. Gold with less than 41.70% purity isn't typically considered gold, wheras gold with over 99.90% purity is exceedingly rare considering natural gold always contains trace amounts of other metals.
Gold with higher purity levels will be much easier to sell. Aim for a rating of 99.5% or higher–this is the industry standard for most bullions and the minimum requirement for IRS investments.
Types of Gold
Physical gold comes in many different forms, each with its unique price point:
- Gold Coins: The value of gold coins is influenced by both content and collectability. Collectible coins can appreciate or depreciate based on their popularity, which means prices can surpass their material value due to their rare status.
- Gold Bars: These bars may not be as visually appealing as coins, but their value closely follows market prices. Factors such as recognizability, size, and condition can affect their value and ease of sale.
- IRA-Approved Gold Bullion: For those seeking a straightforward approach to purchasing gold coins or bars, considering IRA-approved gold is a wise choice. These meet the IRS's strict requirements to ensure their investment value. Gold Jewelry: Gold jewelry is a common form of physical gold, but it comes with investment nuances. Its value depends not only on gold purity and market value but also on factors like craftsmanship and collectible appeal.
It's essential to remember that each piece of gold is distinct, even if they look identical. Differences in metal purity, premium pricing, and collectible status can lead to significant variations in value.
Storage Considerations
When acquiring physical gold, it's crucial to decide where you will store it. You have three primary options:
- Fireproof Vault: Invest in a secure, fireproof personal vault for at-home storage.
- Safety Deposit Box: Rent a safety deposit box from a trusted bank, providing a balance of access, security, and storage.
- Gold Custodian or Depository: Entrust your precious metals to a professional gold custodian for maximum security and often insurance coverage.
Considering a Gold Investment?
Gold can be a sound investment choice when incorporated into a diversified portfolio. It serves as a medium-risk investment that complements traditional investment strategies. Investors use gold for diversification, as a hedge against inflation, a store of value, and for its liquidity.
To begin your gold investment journey, explore our list of the best precious metals dealers in the US. If you are interested in a gold IRA, visit our Gold IRA comparison page to receive free quotes from top-rated gold IRA companies.
