Investing in Physical Gold

When the global markets are unstable many investors like to seek refuge in physical gold rather than in mutual funds or EFTs. If you’ve only invested in funds before, physical gold might be a whole new territory for you; don’t just jump in, though, read these tips first and then buy gold bars from Golden Eagle Coins.


If you buy proof coins, don’t pay a premium

Proof coins are special edition coins that are made specially for collectors, who usually buy them mounted in a special case. The focus, as they’re made for collectors, is on their appearance rather than their grade. These coins are made with special dies that have been sanded and treated with chemicals to smooth down the face of the die. This gives the coins a frosted appearance, with the design elements standing out more against the background.

Proof coins aren’t meant for circulation – just collections – and so their ornamental value is more than that of regular gold coins. They’re usually more expensive then regular coins and as such aren’t really suitable for investors, who will find bullion coins and bars more useful for their purposes.


Don’t just go for the historical value

Of course, it’s a human impulse to want to own a bit of history and buying historically significant gold coins is one way to do that. However, unless you’re something of an expert in old coins, you can easily become confused. Not all coins have any historical value and so you could end up paying over the odds for a coin because you don’t really know what you’re doing. It’s best to stick to coins of less than 100 years old that have been struck as collectibles and used as legal tender.


Avoid buying lots of fractional coins and bars

It makes more sense to buy full 1oz bullion coins and bars than many smaller fractional coins. Fractional coins – 0.5oz, 0.25oz and so on – are usually sold with higher premiums than 1oz coins and are used for diversification or to make up unrounded investment amounts. If you don’t need to buy them, don’t.


Don’t use any forms of leverage to buy gold

If you buy gold with borrowed money then you’re taking a big risk because if the value drops significantly you can end up with some big losses.

Some brokers offer leverage through margin-approved trading accounts – you’re making a trade that’s bigger than the amount of money you actually have in your account.

The difference, or deficit, is financed by the broker and this is great for them because they’ve effectively sold more gold than you’d have bought otherwise. However, the trouble comes when gold prices fall – not only have you wiped out your investment amount, but you’re also having to pay back the extra amount, plus interest. Only buy what you can afford with ready funds.


Move fast

When you decide to invest in gold, have a look at the spot price for that day and if you like it, buy it! There’s no point in dithering about, waiting to see if the price falls, because if it doesn’t, you may have missed the boat for a while. Of course, it could fall the next day, but you still have your gold anyway!


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