When you purchase a gold bullion security, you're purchasing an amount of gold bullion, which typically refers to gold bars in the context of securities. However, you don't necessarily have to store the gold bullion yourself, which naturally would bring risk of theft. Instead, you receive a certificate of deposit stating what you own. This allows you to easily sell or purchase the gold or include the investment in your retirement plan.
1. Determine how much to invest in gold. Investing between 5 and 15 percent of your total assets in gold is wisest, according to Mark O'Byrne in Money Week's "Investing in Gold: A Beginner's Guide." This essentially provides insurance to ensure your financial security, because gold remains a relatively stable investment even during difficult economic times, he says. This strategy also ensures you don't divert too much of your funds into financial insurance rather than into potentially high-performing assets.
2. Decide whether to purchase allocated or unallocated gold. Unallocated gold is essentially gold a bank owes you. You can own a specific amount of unallocated gold, but not a particular block of gold. Thus, some experts consider this a slightly riskier investment. However, when you purchase allocated gold -- specific physical supplies of gold -- you'll likely incur additional fees above the purchase price for storage, shipping, insurance or other maintenance and processing costs. Thus, unallocated gold remains the most popular option, according to the website Bullion Vault.
3. Research gold securities suppliers. Make sure the supplier you choose offers at least 22-carat gold, say John Katz and Frank Holmes in "The Goldwatcher." Also ask how long the firm has been operating and request references. Look for a firm with a high credit rating. "AAA" is the best rating, and the credit agencies Standard & Poor's and Moody's offer online resources for determining ratings . Katz and Holmes note that the Bullion Vault is one credible firm that allows for purchase and remote storage of gold, with prices that include storage and insurance. The purchase price is all-inclusive. The Perth Mint Certificate Program also allows you to purchase unallocated gold bullion securities without additional fees for storage, insurance or anything else, or allocated securities with additional fees.
4. Purchase your gold. Do this online through a program such as the Bullion Vault, or go to a registered gold dealer. Securities suppliers that don't let you purchase gold online typically list their suppliers. The Perth Mint Certificate Program has a list of its dealers on its website. Contact a dealer to arrange purchase if you decide not to purchase online.
- Precious Metals Trading; Philip Gotthelf
- Money Week: A Beginner's Guide to Investing in Gold
- The Goldwatcher; John Katz and Frank Holmes
- Bullion Vault: Unallocated Gold
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