How to Invest in Gold
How to Buy Gold
If you are looking to protect your wealth from financial crises and economic shocks, adding gold to an investment portfolio is a prudent choice of smart investors.
During times of economic uncertainty, unsustainable public debt and trade wars, gold is a proven and tested form of insurance against financial and geopolitical risk. If you want to buy gold bullion such as gold bars and gold coins, you are probably wondering
How do I buy gold?
What are the best ways to buy gold?
And more importantly…
Where do I buy gold?
Buying Gold Is Not Just For the Rich
A lot of people wrongly assume that buying gold as an investment and financial insurance is reserved for the super-rich. Despite being a highly valued and precious asset for thousands of years, nothing can be further from the truth. In the past, gold was treasured by kings and is still stockpiled by central banks and governments as the safest of all assets.
Today, buying gold is as simple as purchasing any other financial asset. Even as a private investor you can purchase gold coins or gold bars from a reputable precious metals broker and have them delivered to you fully insured or have them securely stored in specialized, high security gold vaults. No matter how much you are looking to invest, there are gold coins and bars to suit every buyer or investor.
Will You Own Real Gold?
There are different ways of owning gold, and for someone new to the market, this can be somewhat confusing.
Gold is a valuable asset and commodity and you can buy gold in several ways; physical gold bars, gold coins, gold certificates, gold Exchange Traded Funds (ETFs), gold jewellery, digital gold, and shares in gold mining companies. However, some of these types of gold ownership are highly speculative and come with risks that may not be immediately obvious to an investor.
Before choosing the type of gold investment which suits your purpose, it’s critical that you bear one thing in mind; just like buying a home, the gold is indeed yours if you own the physical asset and have all rights to it. You must have the sole right to take delivery of, gain access to, sell, or transfer to another storage location. This is the only guarantee that your gold is secure as an investment and financial insurance.
Some forms of gold ownership provide you with these rights while other forms are less flexible and transparent.
When you first start your research into investing in gold it is important that you understand certain concepts in order to compare the relative risks and suitability of different forms of gold ownership for your specific needs.
Types of Gold Investments
There are many different ways to invest or buy gold that is available to private investors. The following are some of the most popular ways.
Gold Bullion Bars and Coins: Buying physical gold bullion is the best way to own gold. This involves purchasing actual physical gold bars or coins and taking delivery of them or having the gold securely stored in specialized high security vaults on your behalf. This is highly recommended.
Physical gold is tangible, portable and finite, and cannot be destroyed by fire, ageing or the actions of unstable banks and governments.
The most popular gold bullion coins and bars are of a standard weight and size and are therefore universally recognized and as a result they are very liquid and have a huge market worldwide. This means that you can purchase coins from one supplier and sell them via any number of thousands of different suppliers worldwide.
The best gold coins to buy are available from a trusted dealer like GoldCore. These are certified and obtained from recognized sovereign mints such as The Royal Mint, The Perth Mint, The US Mint, The Royal Canadian Mint and The Austrian Mint, among others.
Gold bullion bars come in several sizes including 1 ounce, 10 ounces, 1 Kilo, and 400 ounces.
Allocated and Segregated Gold: The Best Way to Invest In & Own Gold
When you invest in allocated gold, you become the outright owner of a specific quantity of gold. It remains your personal property and should never be part of a company, mint, bank's reserves, or balance sheet. It is therefore not at risk if the supplier fails and cannot be subject to a seizure by the government.
Segregated gold ownership goes a step further by storing your gold separately from that of other investors. Your gold is individually identifiable at the vault; in most cases, you can demand to see it at any time to verify its existence and you should be able to organize insured delivery quickly and with ease. Segregated gold adds an extra layer of protection that guarantees total and unencumbered ownership of the owner’s physical gold.
Therefore, the safest, most secure way to invest in gold is to purchase gold that is both allocated and segregated. This means that your coins and bars are both individually identifiable and are stored separately from other investors' gold. This gives you the important flexibility and liquidity in terms of being able to take delivery, sell or move your gold whenever you wish.
Gold Certificates: Gold certificates are another way of investing in gold. The issuer provides a gold certificate as proof of your ownership of a specific amount of gold held by them on your behalf.
While gold certificates can be issued by many different entities, the safest and most secure of these are gold certificates issued by government mints such as The Perth Mint of Western Australia. Their Perth Mint Certificate Programme (PMCP) is popular with investors and pension owners globally and GoldCore is the sole PMCP distributor in Ireland, the UK, and the EU.
Through these programs, there are different types of gold certificates that you own which determine how your gold may be used and stored by the issuer which exposes you the gold investor to varying different levels of risk.
The different types of certificates that you can own via these programs include:
- Allocated Gold Certificates: When gold is allocated it is taken out of the working pool of gold used for making the mints various coins and bars and is formatted into individual coins and bars of your choosing. These coins and bars are individually identifiable and can therefore be allocated to your certificate.
- Unallocated Gold Certificates: When gold is unallocated it remains as part of the mint’s working pool of gold used in its commercial activities. As a result, it is not possible to identify your specific gold as it is co-mingled with the gold of all of the other investors in the unallocated pool. This is sometimes also referred to as pooled gold.
As the gold is stored as part of these unallocated certificate programs, it can make up the working stock of the mint. This makes you a creditor of the mint.
The less risk that you want to have to a highly rated government mint the more expensive it will be to purchase and store your gold in certificate form.
However, if you are willing to accept more risk to the mint and looking for a way to own physical gold while saving on insurance and storage costs, then Unallocated Gold Certificates are the way to go, as Allocated Gold Certificates are more expensive.
Some unallocated gold certificates can be exchanged for physical gold at a cost to you but it can be cumbersome.
You must have your unallocated gold taken out of the general pool of unallocated gold and fabricated in to smaller coins and bars of your choosing. You can then pay to have them shipped to you or stored on your behalf.
Download the complete guide here
How to Buy Gold and Silver in Ireland - The Complete Guide
Gold Exchanged Traded Funds: There are Exchange Traded Funds (ETFs) and Exchange Traded Commodities (ETCs) that allow investors to get exposure to the gold price. Gold ETFs track the price and performance of gold with the aim of offering an easy way of profiting from the international gold market. You can easily buy into a gold ETF or ETC by contacting a stockbroker many of whom are now online brokers.
Although some gold ETFs are backed by gold and may provide some of the financial benefits of gold ownership, they are not as dependable as a form of financial insurance like physical gold.
This is simply because when you own a gold ETF, you are a shareholder in a fund that owns gold, you have no direct claim or ownership of the underlying gold asset. You remain exposed to bank risk, fund mismanagement, technological risks, or economic meltdowns, and will not have physical gold to protect your wealth when you need it most.
Gold Mining Shares: When you buy shares in a gold mining company, you are effectively trusting your hard earned money with the management of the company.
Gold mining is a competitive and cost-intensive business. With ever shrinking gold reserves, high costs of financing new ventures, and mounting costs of gold extraction, the performance of mining shares may not reflect the real performance of gold. You will instead, be exposed to economic shocks and corporate mismanagement like any other investor on the stock market.
If you invest in a gold mining stock you are effectively speculating on that company’s ability to find and extract gold from the ground profitably.
While this type of speculation may pay off, it does not necessarily provide any form of financial insurance for your portfolio during times of uncertainty and may indeed increase significantly the risk in your investment portfolio.
Digital Gold: Digital gold refers to gold purchased via one of the many gold platforms selling gold to the public.
Generally, it is another form of unallocated gold which although popular with some tends to be avoided by discerning and risk averse investors and gold buyers. This is mostly due to the fact that buying gold in this way exposes you to a lot of unnecessary risks.
You are purchasing unallocated gold from a private company and in most instances cannot access your gold or easily take delivery of your gold.
Your gold is not individually identifiable from the gold of other holders.
Your gold is generally not segregated (stored separately) from the gold of other holders.
You can only sell your gold back to the same supplier that you bought it from, meaning that your form of gold ownership may become a lot less liquid than physical gold.
You are exposed to the management, mismanagement and technological risks of a private company and their websites, servers and IT architecture and technology.
These forms of digital gold tend to be cheaper forms of accessing the gold market for those with a greater appetite for unnecessary risk.
Gold Jewelry: Buying gold jewelry is another way of owning physical gold.
However, most gold jewelry is sold at a very high premium to the value of the gold content as you are effectively paying for the marketing, manufacturing and in some cases craftsmanship involved rather than the gold content. The price of jewelry does not reflect the spot price of gold, while the value of gold in any jewellery is only a small percentage of the cost of the piece – sometimes as much as 80% below the spot gold price. For this reason and the fact that jewellery generally attracts VAT or sales taxes, gold jewellery has very little investment value.
What's more, gold jewelry is not easily authenticated and will require an essay before it is sold. This makes it more costly and complicated to sell when the time comes.
All in all, this is not a smart way to gain exposure to the gold market.
An Overview of the Risks
Risks of Unallocated Gold in an ETF, Bank, or Digital Gold Provider
Unallocated gold, remains part of the working reserves of the provider which effectively makes you their creditor. You become part of a group of investors who have the right to demand physical gold from that provider. Although the supplier holds gold on your behalf, you cannot establish exactly which gold bars or coins in their vault belong to you, if any. In some cases unallocated gold has been lent to other parties and is re-hypothecated (used for their own purpose).
Unallocated and unsegregated (not separated from other investors gold but co-mingled) forms of gold ownership, e.g., unallocated gold accounts or a gold ETF, can expose you to numerous risks. This is especially so when a pool of investors shares the rights to your gold investment or when a gold fund is hidden behind complex layers of ownership,
Firstly, in the case of a gold ETF, the fund may not own physical gold, and even if it does, you may not have the right to ask for it. The fund is only obliged to provide a cash equivalent when you demand it.
Secondly, by not having direct and outright ownership of gold in the fund, you are essentially a creditor to the bank or fund. The safety and security of your gold will depend on the performance of the fund or bank’s management, which exposes you to risks like any other investor in a company.
Thirdly, with unallocated gold, you cannot easily verify that the many custodian or sub custodians does indeed have enough gold reserves to meet the withdrawal demands of every client.
Finally, unallocated gold is not your personal property and can, therefore, be more easily seized by a government or other creditors in the event of an economic crisis or bankruptcy.
Such forms of gold ownership do not provide the best wealth protection and financial security, especially during times of geopolitical uncertainty or an economic meltdown.
How to Buy Gold in Ireland
The best place to buy gold bars and gold coins is from a trusted, and professional dealer with a solid reputation in the industry.
As a gold investor, you are looking for the safest, most secure and confidential way to buy gold. What's more, you need guarantees that you are investing in authentic gold that is sourced from the top sovereign mints in the world.
GoldCore offers more than just the most popular gold bullion coins and gold bars: you get access to Secure Storage in the most secure jurisdictions in the world including the Switzerland, Singapore, Hong Kong, the UK, the US and Ireland.
These high security gold vaults are operated by the leading professional third party specialized security companies.
y investor in gold further requires assurance that the dealer will buy back their gold at the best possible price when needed. As a large dealer, GoldCore consistently makes a market and provides highly competitive prices to its customers.
How Not To Buy Gold
It is unwise to trust your hard-earned money with small gold dealers or safety deposit box providers. Such entities expose you to numerous risks including high premiums, fake or unauthenticated gold, lack of confidentiality, and failure to buy back your gold when you need to sell it. Since small dealers cannot make a market, they suffer from poor liquidity and do not tend to offer the best prices.
Owning physical gold secured in a protected vault in the safest jurisdictions is the best way to buy gold as an investment.