- 1). Decide how you want to buy gold. There are a number of different ways to choose, and each have their own advantages and disadvantages.
(1) You can buy physical gold online from a gold dealer (or even on eBay) for delivery.
(2) You can buy a gold ETF or ETN in your brokerage account, just like buying a stock.
(3) You can buy gold futures, which are essentially the right to buy a certain amount of gold at a specified time in the future, at a specified cost.
(4) You can buy ownership in gold where a company stores the physical gold for you. You may receive a certificate or other verification of your ownership interest. - 2). Understand the different factors impacting the valuation of physical gold bars and coins. A gold coin may have value for two separate reasons: first, the content value of the gold, and the numismatic value of the coin. The content value of the coin is straightforward: the more gold that is contained in the coin, the more that the coin will be worth (all else being equal). The numismatic value of a coin is a bit trickier. Some coin investors and coin collectors look for rare and unique coins. This means that a rare type of 1 oz gold coin may be worth more than a more common type of 1 oz gold coin. If you are not a coin collector, and are just interested in investing in gold for gold's sake, then stick to buying the more common types of gold coins available (e.g., Canadian Gold Maple, Gold Krugerrands, Gold Eagles, etc.). These are much easier to buy and sell, and the valuation of them will generally much more closely track the price of gold itself.
- 3). If you want to buy a gold ETF or ETN, research the tax consequences and risks associated with the particular ETF. You might think that all gold ETFs are the same. But gold ETFs invest in gold using different methods. This means that the ETFs have different risks and tax consequences. Consult with a tax adviser or financial planner if need be.
- 4). If you are not familiar with how a futures market works, then stick to one of the other methods of buying gold, rather than buying gold futures. Gold is an easy investment to understand -- it is a scarce precious metal. That's one of the reasons why people buy it -- gold doesn't have a risk of accounting fraud, it doesn't go out of business, it doesn't have a greedy CEO, it doesn't give out ridiculous bonuses. Gold just sits there. And over long-term history gold has retained its purchasing power. So remember that there is no need to make the process of buying or selling gold any more complicated than gold itself.
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