What is the Most Efficient Way to Buy Physical Gold?

What is the Most Efficient Way to Buy Physical Gold?

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Gold has long been a precious metal coveted by cultures around the world. It makes sense that it would still hold value today. In fact, gold isn't just for collecting or admiring anymore.

It works well as an investment choice with tax benefits.

For investors who're interested in buying physical gold, take a look at the most efficient way to purchase and invest it today.

Before we get started, investing your savings is a serious task. When it comes to adding precious metals to your portfolio, how do you know which companies to trust?

That is why we have researched every company in the industry and selected the very few with the highest customer service standards.

This way you can easily compare the best companies in the business, and choose one that fits your needs and investment goals.


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Understanding Why Gold is a Good Investment

Gold is a tangible asset. Investors can hold it in their hands and know there's intrinsic value to the item, for example.

It might be traded or sold for a certain amount based on weight, purity, and other factors. Because gold tends to hold a steady value, it's a good investment.

In fact, gold often rises in value over the years. Historical trends support this claim, which gives investors another reason to hold onto gold as a long-term investment. 

Investment data

Gold isn't tied to the stock market like stocks or bonds. An economic collapse might negatively impact these paper assets, but tangible assets remain largely untouched. Investors who want to protect at least part of their savings can make a secure move by adding precious metals to a portfolio.

In general, gold is a great way to hedge against inflation and provide for a family's legacy. It might be held at home in a safe or secured at a depository. Investors have plenty of choices for gold investments.

Exploring Various Ways to Invest in Gold

1. Gold Bullion and Coins

One of the most popular ways to invest in gold is by seeking out bullion or coins. Bullion simply refers to a metal that's been highly refined, which indicates its attractive purity level. For investment purposes, gold must be at least 99 percent pure. 

Investors can find bullion in the form of gold bars or coins. Gold bars are literally rectangles stamped with the metal's critical details. 

Gold Bullion and Coins

Investors might store these bars away in a safe at home or open a gold IRA or Individual Retirement Account. Keep in mind, however, that any gold held in a precious metals IRA must be IRS-approved products.

Gold bars offer some flexibility for investors who're just starting their nest egg. For example, some bars might be as small as a single gram or as big as several ounces. Because investors pay for gold by weight, the bars can be affordable options for many budget types.

Many investors prefer gold coins over bars because these items come with unique designs. These coins hail from government mints around the world, including the American Gold Eagle, South African Gold Krugerrand, Australian Gold Kangaroo, and the Canadian Gold Maple Leaf. All of these coins should have a purity level and year to indicate their value. 

2. Collectible Coins

A classic investment is found in collectible coins. They came from a mint at some point, but they've circulated as currency ever since.

As a result, their investment value isn't based solely on the coin's metal cost. The value is mostly in the historic nature and limited quantity of certain coins. 

Collectible Coins

Investors should be careful about investing in collectible coins for retirement purposes. They cannot be held in a gold IRA to gain tax incentives and returns in the future. Investors simply collect the coins, store them at home, and hope to achieve a return in the form of a future sale. 

Ideally, investing in any gold coins should be narrowed down to IRS-approved products. American Gold Eagle and Canadian Gold Maple Leaf coins are some of the best choices in this case.

3. Gold Futures

An unusual way to buy physical gold is through gold futures. This investment is found just off the New York Stock Exchange at the COMEX or Commodities Exchange. In essence, investors contract to buy gold at a specific value set on a future date.

Gold Futures - GOld COMEX

When this date arrives, investors can take physical possession of the gold or opt for a cash option. Because investors are putting an educated guess toward the value of the gold at a future date, there are possible profits to be made.

This investment option is unique because investors have the choice of remaining on a cash contract or keeping the physical gold. These precious metals, however, aren't eligible for a gold IRA. They would have to be stored outside of a depository.

4. Gold ETFs

Gold ETFs are essentially stocks offered by a gold mining company or other associated precious metals industry. Essentially, investors fund the company's success in mining and distributing gold. 

This investment choice is similar to paper assets. Investors do not take possession of physical gold. 

Gold ETFs

They're backing a company that works with gold. When the company performs well, there can be dividends added to the investor's account.

If investors are wary about buying gold at first, ETFs are a comfortable way to enter the market. Because they're treated like holding a traditional stock, ETFs give investors a taste of gold investment. As a result, investors can branch out to other investments with more confidence afterward. 

5. Gold Jewelry

In the past, gold jewelry was a traditional way to invest in precious metals. It can still be a good investment especially when handed down from generation to generation. Ideally, look for gold with an authenticated purity, such as 24-karat gold.

Other gold types have a mixture of other metals woven into the jewelry. As a result, its value won't be as high as a 24-karat piece. This description tells investors that the gold is essentially pure.

Gold Jewelry

Look for simple necklaces and bracelets when it comes to investing in gold. Investors don't need to pay for elaborate designs, for example. They're looking for the value in the metal itself. Detailed jewelry is more expensive to purchase, which doesn't add to the gold's value over time.

Additionally, investors cannot keep gold jewelry in a gold IRA. The government doesn't allow for it. Any jewelry should be kept in a safe and secure place in the home.

6. Gold-Backed Cryptocurrency

One of the latest ways to buy physical gold is through cryptocurrency. In short, crypto is a form of digital currency that's accepted in limited areas across the globe. There's no need to exchange currency between countries when consumers use crypto, for example. 

Gold-Backed Cryptocurrency

Gold crypto is a digital currency that's supported by physical gold. Investors pay for the crypto, and in exchange, an equal amount of gold is secured away in a vault.

When investors want to cash out their crypto, they can take possession of the physical gold or exchange it for cash. The cash option pays out according to the gold's spot price.

Many online companies deal in crypto, so investors will need to perform some research before making any financial decisions. This investment strategy is in its early stages. As a result, reputable companies may be small in number.

Buying Gold For Investment Purposes

Investors must be careful about choosing the right dealer for their investment in gold. Illegal and even counterfeit gold can be found all over the Internet. When buying gold for investment purposes, analyze each dealer with these simple steps.

1. Experience is a Must

Always select a dealer that's been in business for many years. This experience tells investors that it's not a scam. The company has succeeded in the marketplace and may possibly have good customer service. Ideally, look for dealers with at least five to 10 years of experience.

2. Look at Complaints

Every business will have both good and bad reviews. Go to the Better Business Bureau website. Read over the reviews and any complaints. Be particularly aware if there's a pattern to the complaints.

If several people didn't receive a gold shipment and were denied a refund, move on to another company. These patterns speak to a larger problem at the dealer level, which can happen again.

3. Variety Speaks Volumes

Reputable gold dealers will have more than just gold coins and bars. They might offer silver, platinum, or even palladium precious metals. The inventory may have various sizes and shapes too. A variety of items tells investors that the dealer has dedicated substantial capital to these products.

As a result, there may be deals on buying multiple items. In addition, the company won't simply disappear from the Internet. They'll always have items to sell soon.

4. Showrooms are a Plus

Investors may be wary about buying gold online. However, companies exclusively selling gold online aren't necessarily a problem. That's simply the current trend.

If investors find a dealer with an actual showroom nearby, take advantage of the in-person experience. Investors may be able to see, touch and purchase the gold at the showroom. This scenario may be rare, but it is possible.

5. Multiple Communication Pathways

Look for gold dealers with several communication pathways. For example, a hotline, email, live chat, and contact form are comfortable groups of communication choices.

A bonus pathway would include a physical address. If investors don't see many communication choices, this fact may be a red flag. Researching another dealer may be a better option.

Discovering Gold IRAs

One of the most efficient ways to buy gold is through a gold IRA. These retirement accounts work in a similar way to traditional or Roth IRAs. Investors fund an account, watch the balance grow in value, and withdraw the funds as income in retirement. 

The tax benefits are the main advantage of a gold IRA. For example, funding the account can be through either pre- or post-tax money. Many investors opt for a rollover from a 401(k) or other IRA to fund a new gold IRA.

Discovering Gold IRAs

Because the funds move from one account to another, there's no tax due. In fact, investors don't have to pay any tax on the gold IRA account until distributions occur in retirement.

There's no real limit on how much an investor can roll over to the gold IRA either. As long as it's a single rollover, the government approves of the transaction. Multiple rollovers aren't allowed more than once a year by the federal government.

Afterward, investors can contribute funds up to a certain limit each year. Although this strategy doesn't have as many tax advantages as a rollover, these contributions can be helpful on next year's income tax returns.

Opening up a gold IRA is the first step toward taking full advantage of these tax benefits. Initially, investors must find a custodian specializing in gold IRAs. They're often found online with various years of experience. Research and contact a custodian to set up an account.

This custodian will be the account manager for the gold IRA. Any transactions are directed by the investor and carried out by the custodian. This process is a federally mandated rule. Investors maintain a hands-off approach to gold investment to protect its value.

Subsequently, the investor funds the account with a rollover or other transfer. The custodian uses these funds to buy IRS-approved gold as directed by the investor.

Additionally, the custodian sets up the shipping process to the investor's chosen depository. This secure building at a separate location is where the gold will remain locked away until retirement. 

This physical gold is now secured in a gold IRA with every tax advantage possible. Investors can take physical possession of the gold in retirement or cash it out at the spot price offered in the future.

Looking at Gold FAQs

1. What Fees are Associated With Gold IRAs?

Investors should expect more fees with a gold IRA than with a traditional IRA. Custodians often charge account setup and maintenance fees. In addition, the depository should charge storage fees.

Any fees are typically listed for the investor before opening the account. A reputable custodian is fully transparent when it comes to fee structures.

2. How Much Gold Should be in a Retirement Portfolio?

Every portfolio should be diversified. Ideally, any precious metals IRA should only take up about 10 percent of the portfolio. Other investments, including stocks, bonds, and mutual funds, should round out the rest of the portfolio.

3. Are Gold Shipments to a Depository Insured?

Every dealer has their own policies about shipment types. However, reputable dealers usually insure the packages so that any loss is covered. Investors might also ask about product packaging. Any shipment should be in discreet packaging so that the contents are unknown.

4. Is There a Minimum Amount to Set up a Gold IRA?

Custodians differ when it comes to minimum investments. For example, some companies ask for a minimum of $5,000, whereas other businesses require $50,000 or more. Because of the variation, investors should research their custodians with care. It might be one of the first questions to ask. There are budget-friendly custodians in the industry, so be thorough with the research.

5. Why Doesn't a Gold Dealer Display Product Prices?

Gold is a commodity that fluctuates in price throughout the day. In fact, some gold dealers have a live ticker on their site to reflect spot prices. Because of the changing value, most dealers ask investors to call for a price regardless of the product type. At that time, investors can lock in a gold price.

6. How is the Gold Stored at a Depository?

There are two main storage types, including segregated and commingled. Segregated storage means that an investor's precious metals are kept separate from other clients' items.

Alternatively, custodians may have a commingled section where all of their investors' items are kept together. The storage type should be disclosed before setting up a gold IRA.

Final Thoughts

Researching gold purchases beforehand is a smart way to understand the process and avoid any scams. Investors have a great opportunity for growth when they open and fund a gold IRA. Starting as soon as possible allows the precious metals to grow in value over time.

Remember to read our list of the Top Gold Companies.

>> Click HERE to read our Best Precious Metals IRA Companies list <<


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