How to Get in on the Gold Rush

NEW YORK (MainStreet) — Gold is flying off the shelves, trading at $1,737 an ounce Monday. Gold has flirted with $1,800 per ounce, and at least one major Wall Street investment firm – Goldman Sachs – thinks it can go to $1,860 per ounce.

Is it too late to get into gold? Possibly, although nobody knows for sure. If the financial environment gets worse, sure, gold can rise even higher. Investors treat gold as a hedge against a tough economy – it offers the value of a “hard asset” that would be in high demand if the economy and U.S. dollar collapse.

On the other hand, if the economy improves, there would be less demand for gold as investors put their money back into the stock market – the usual means of wealth creation in a free-market society. Plus, know that gold values are extremely volatile; prices can rise and fall significantly over short periods.

If you’re inclined to buy that shiny yellow metal, the good news is that you have some options. Today we’ll examine the best ways to buy gold, and tomorrow we’ll take a look at the best ways to store it.

Buy gold directly.

Gold bugs can buy the metal in any form: as gold bars, bullion, coins and even gold scrap and jewelry. You can buy gold directly from a pawn shop, an antiques dealer and gold mint providers; eBay has reported a big uptick in gold purchases, with gold coins and bars up 5% last week, and has even created a page for sales of gold and silver. Plus, there is no shortage of other online gold outfits that sell physical gold, at sites such as BullionVault.com and GoldenEagleCoin.com.

Make sure the gold you’re buying is legitimate.

If you buy from a second-tier seller such as a pawn shop or antique shop, or even on eBay, the chances are good it won't be 100% pure gold. Gold coins are usually the exception. The key as a buyer is to focus on the dealer, the kind of gold you’re buying, the quantity and where the gold originates. Any gold purchase should come with a letter of authenticity. So go with a gold broker with years of experience – don’t deal with any fly-by-night companies you don’t trust.

Buy gold stocks, mutual funds or exchange-traded funds.

Buying gold as an investment could well mean treating it like a stock or a bond and simply buying shares of a bigger gold investment. You can still own gold, but you don’t have to worry about storing it (and storage prices are going up right now), insuring it (in the event it’s lost or stolen) or having to figure out whether coins, bullion or bars are the best way to go. It’s not easy to figure out whether you’re better off with a gold eagle coin or a Krugerrand, so why not let a trained professional buy your gold for you? It’s not as expensive as you might think – you can buy into a gold stock or fund for less than $10 per share.

With gold up 21% in value this year, there is some debate whether the market has topped out. But if you believe the economy is still heading south and you want a good insurance policy, gold may be your best bet.

Just follow the tips above, do your homework, get in gradually and thoroughly vet any seller (if you’re buying gold directly). Past that, you’ll be a proud owner of gold in no time at all.

Are you worried about how to navigate the tumultuous economy? Check out MainStreet's look at what the average investor should do to get the most from changing conditions in the market!

Show Comments

Back to Top