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So it is important that you understand why people invest in gold, what factors drive the value of gold and the best ways to invest in gold.
From an investment portfolio standpoint, gold is used today as a hedge towards inflation and to help provide overall diversification. I have personally been investing in gold for over 20 years now. I’m going to share with you all my lessons learned so that you can ultimately make the best decision for yourself if gold is the right investment for you. There are some great financial instruments that you can leverage today all based on how you want to get exposure to the precious metal.
I’m going to briefly go over the history of gold as an investment, why people invest in gold, the 3 ways you can invest in gold and some recommendations of where you can get gold exposure in your portfolio.
Be sure to also watch my YouTube video below on Gold investing.
King Croesus of Lydia remains associated with the invention in the 6th century BC. In 546 BC, Croesus was captured by the Persians who adopted gold as the main metal of their coins and the rest is history as it spread across the ancient world to modern times today.
Gold has been valued through the millennia due to its luster or shine, malleability and hardness, making it ideal for being used in jewelry and coinage.
All three of these are driven by the market conditions around the price of gold itself. So it is important that you understand how the price of gold is determined before we dive into these three methods in more detail.
Gold is what is called a commodity. Commodities are goods such as gold, silver, wheat, crude oil and coffee for example. Gold is not only used for investing, it is used in the jewelry industry, electronics, automotive, energy, aerospace and so much more. These industry uses are what drives what is called the intrinsic value of gold in the open market.
Commodities have their own exchanges that trade in financial instruments called futures contracts. Futures contracts provide the commodity producers and the commodity consumers a way to manage price risk upon delivery of the commodities.
In simple lamens terms, gold like other commodities are bought and sold on open markets where they determine the current and value of gold. One of these open markets is called the CME Group.
For more information on commodities futures trading, go to cftc.gov.
The price of gold that you and I would purchase gold at is called the spot price of gold.
The spot price of gold is the current price that one ounce of Gold can be bought and sold for immediate delivery. The price for any Gold product is the spot price plus a premium, which is added by all dealers to cover their overhead costs. The spot price fluctuates constantly making it important that you monitor prior to making a purchase or sale of gold. The spread is the difference between the buy price and sell price.
Because the global supply of gold is relatively finite, gold’s purchasing power has historically remained stable during inflationary times. An ounce of gold also has the same value anywhere in the world.
If you want to learn more about inflation and how it works, please watch my YouTube video below on inflation.
There are so many options when it comes to purchasing gold bullion. Gold bullion can be purchased as coins or bars form from a quarter of an ounce to 400-ounce bars of gold. Physical bullion typically has a premium of 1-10% over the spot price.
Be sure to purchase mint quality with the highest purity possible.
I personally prefer smaller denominations due to them being easier to store and carry.
Gold bullion premiums apply to both the buy and sell-side. So take that into consideration before you plan on investing, purchasing and selling gold bullion. Gold like any investment comes with investment risks.
For years I’ve used a couple of different trusted sites to determine the value of gold and silver coins gold coinage. I’m recommending that you use the NGC pricing for the melt value of the coin to determine the spot value of the coin your researching.
Here is a link to the coin melt value page.
This does not take into consideration any historical or numismatic market value of the coin. In this article, I’m going to focus only on the spot price of gold coin bullion and not its numismatic value.
This is a great site for gold and silver coin values. It breaks down for you the price of the gold based on the coin’s weight and percentage of actual gold in the coin itself. All of this is directly tied to the current spot price, not including any premium. This is an independent website that has always provided me a good gauge of what the current spot value of a coin is before I start shopping around for purchase.
Make sure you’re purchasing your gold bullion from reputable dealers. If you’re looking to purchase United States Mint gold coins here is a list of their authorized purchasers. I personally use APMEX, but you can shop around and do your own market research to determine which dealer you like the most.
With APMEX I’ve been able to easily purchase gold bullion online, their prices and purchase buyback program are top-notch in the industry.
The biggest CONS of investing in gold bullion are the challenges related to the overall purchase, sale and storage of the bullion. APMEX is great for example, but you still have to shop around their site to figure out which gold coins or bars to buy, get them shipped and then you have to store the gold somewhere.
Today there is an amazing new platform that I highly recommend called vaulted that provides a world-class purchasing and sales process of gold bullion but they handle all the storage for you. Even better it can all be done from a simple mobile app.
Through the Vaulted app, you invest in 99.99% pure gold kilo bars manufactured by the Royal Canadian Mint and certified Conflict-Free. They can continue to store the gold for you or only with your permission, your gold be physically delivered, to your home, business, or another vault in about a week via FedEx. If you’re considering investing in gold, I highly recommend Vaulted. Check out Vaulted below.
#1 Rated Gold Investment Platform
Through the Vaulted app, you invest in 99.99% pure gold kilo bars manufactured by the Royal Canadian Mint and certified Conflict-Free. Only with your permission can your gold be physically delivered, to your home, business, or another vault in about a week via FedEx. If you’re considering investing in gold, I highly recommend Vaulted.
Other ways to get exposure to gold are through gold ETFs, gold minter stocks and ETFs. Gold ETFs like GLD are basically trusts that provide you a way to get gold exposure without having to physically take possession of the actual gold bullion itself. Gold ETFs like GLD have purchased the gold bullion, have stored it and provide you the opportunity to trade the ETF in the open market. Generally, ETFs like GLD tend to track very closely to the spot price of gold, but prices do vary slightly. Unlike Vaulted, the prices of GLD do vary slightly from the actual spot price and you can’t get possession of the bullion, you can only buy and sell the ETF.
Gold miner stocks and gold miner ETFs. These come into play where investors are looking for exposure to gold but want yield. Gold miners and ETFs provide diversification but also offer the benefit of dividends as well. Click the link to my article on dividend investing. Also, watch my YouTube video below on dividend investing.
If you’re interested in purchasing gold ETFs, gold miner stocks and ETFs you can do this through a brokerage or retirement investment account. My two #1 rated recommendations are Webull and M1 Finance. Both options are great, but again depending on what you’re looking for and what your plan calls for, one might be better than the other for you. If you’re looking for an automated Robo advisor, set it and forget approach to investing, then M1 Finance is for you. If you’re looking to pick individual stocks, funds and you want to flexibility to day trade at will, then Webull is definitely the better pick for your stock market investment needs.
#1 Rated Investment Brokerage Platform
Today it is easier and cheaper than ever to purchase stocks. Some of them offer completely $0 cost trades and you can do this straight from your mobile phone. My personal recommendation is Webull. It offers all the above plus some of the most amazing stock and fund information at your fingertips. The platform is free so download it today and give it try.
#1 Rated Robo Advisor & Dynamic Portfolio Rebalancing
The M1 Finance investment, retirement account and technology are simply amazing. They even offer dynamic re-balancing, full customization and even some pre-built portfolio options called expert pies. M1 Finance is a strong recommendation for your automated investment and retirement needs. Try them today with only as little as $100 to start investing.
Gold has been used as a form of money for thousands of years. It is easier than ever before to invest, diversify and get exposure to gold.
So what are your thoughts on gold investing? Are you currently investing in gold? Please share your thoughts on gold investing in the comments section below.
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