How to buy gold

More and more private investors are choosing to buy gold today. People rightly buy gold when they see inflation ahead.

In fact, with the world’s major central banks now struggling to maintain their inflation targets, the current lull in gold prices could prove a fantastic opportunity to buy gold.

But what’s the best way to go about buying gold? Type “Buy Gold” into Google, and you’ll be met with a huge range of choices. Most carry their own advantages and drawbacks, depending on your aims and concerns.

Here are the four options now open to private investors wanting to buy gold today:

Buy Gold for Physical Possession

Buying gold to hold in your hand remains the ultimate in tangible wealth. But the big problem with storing gold at home is the gap between prices to buy and prices to sell.

Gold stored and traded by professional bullion dealers in the wholesale market is what creates the “spot” price you see quoted. It comes in large 400-ounce bars – generally inaccessible to the private investor.

This gold also comes with an absolute guarantee of its history, weight and purity. If you buy gold outside that professional system, your gold will lack this guarantee — and loss of integrity is the single greatest cost in private gold ownership.

In Europe and the US, expect to pay spreads of 4% and above, both on purchase and sale, when trading with a gold-coin dealer. For modern-day bullion coins don’t be surprised to get only “melt” value when you come to sell, even though you will pay up to 16% above the spot price of gold when you buy.

Buy Gold through a Storage Programme

If you’re willing to cede outright ownership when you buy gold, then an “unallocated pool programme” will let you buy gold as an entitlement only, stored at low cost, with a view to taking physical delivery sometime in the future.

The leading providers quote around a 1% dealing spread. One firm also offers an “allocated” programme, where buying gold bullion outright in your name costs an extra 1.5% per year in storage fees, plus a $50 flat fee with a minimum gold investment of $10,000 (currently, just over £6,000).

Buy Gold via a Trust-Based Fund

The exchange-traded gold funds (ETFs) launched over the last half-decade let you track the price of gold — if not actually buy gold to own it outright — by trading a security on the stock market. The leading ETFs buy gold and hold it in trust at HSBC in London; ask your stock broker about LxyOr GBS in the United Kingdom and Europe, or StreetTracks GLD in the US.

These shares can only be traded during your local stock market hours. They will also require a transfer of cash into dollars if you’re not buying gold from the US.

Another drawback of buying gold through the gold ETFs is their daily shrinkage. These funds all charge 0.4% per year to cover storage, insurance and administration fees, deducting this fee from the physical gold backing each share. But while the amount of gold backing each share shrinks a little each day, the title on each share remains the same — typically one-tenth of an ounce.

Over time, this gap only grows wider; the shares in Australia’s Gold ETF now represent less than 9.876% of an ounce after just four years. In 2010, they represented less than 9.75%. The sponsors of the leading gold ETF programs are likely to consolidate the shares soon, repricing them to account for this shrinkage.

Buy Gold at BullionVault

Thanks to the cost-savings enabled by the internet, there is now a way you can buy investment-grade gold bullion, outright in your name alone, at low cost. Stored in secure professional vaults in London, New York or Zürich (you choose which location you prefer), gold held at BullionVault costs just 0.12% per year, with insurance included, starting from a minimum of only $4 (currently just under £2.50) per month.

Buying gold at BullionVault couldn’t be simpler, nor more secure. The site lets you set your own prices using a 24/7 online order board, and it gives you instant settlement with zero credit risk.

To find out more about buying gold at low cost today, visit BullionVault and claim a complimentary gram of free gold.

PLEASE NOTE: We at barbarous relic will receive a small referral commission for any accounts opened through this link. But the tiny dealing fees and storage charge you will pay would be no smaller without it.

This service gives you unique access to live gold market prices, cutting out the middleman and slashing the costs of investing in gold.

To find out for yourself, go to http://www.bullionvault.com now.

Buy gold online - quickly, safely and at low prices

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