What Kind of Gold Should You Buy?

by Wes Bridel on December 24, 2009

in Stewardship

This won’t be everything you ever needed to know about buying gold, but we do want to give you some things to keep in mind and some very specific ways that you can purchase gold.  One good thing to do is to go to www.kitco.com and familiarize yourself with the many different kinds of information they have about gold.  There are a variety of ways to own gold.  Each has advantages and disadvantages.  Although we believe these are all high quality choices, we do not represent any of these options.  You should do your own due diligence.

Bullion

This is gold that you can easily get your hands on, preferably hidden safe within your home.

Benefits:  Readily Accessible.  Because we are talking about your cash reserves, the more readily available these reserves are, the better.  This should not be your first line of savings because that would be much too cumbersome, but there are local gold coin dealers in every decent size city who will redeem bullion for Dollars and everyone, everywhere intuitively understands the value in gold (even if they probably don’t currently know its market value).  If there is a severe financial &/or Dollar crises, then having physical gold (or silver) on hand could be the absolute best currency and asset that you could own.

Risks:  Safety.  You must take precautions against fire, thieves, and other dangers.  Because these are physical assets held in your home, someone else could conceivably take them from you, so keep them safe.  We do want to note that very recently in the UK, British officials raided thousands of Safety Deposit Boxes and found many people’s stashed gold.  They did this under the pretext of looking for criminal’s, but in reality raided many people’s property which were in no way thought to be criminals.  One heart rending story was of a very old Jewish man who had learned his lesson in Hitler’s Germany and kept his wealth portable secret  in the safety deposit box in case the government ever turned against him again.  So we wouldn’t assume the a safety deposit box is the most secure place to keep something like gold.

Quality:  Make sure that you understand what you are buying and only work with a reputable dealer.  Coins are generally preferable to bars because certain coins are more readily distinguishable for content because of the reputation of the mint from which they come.  Know the gold quantity of the gold you’re looking at.  If the coin is only 90% gold then it is only worth 90% of the spot price of gold (plus mark up).  Many dealers will try to sell you a “collectors” coin.  This might or might not be a good speculation in certain markets (although we wouldn’t do that in this market), but it is certainly not the kind of savings that we are talking about.  If the economy gets really bad, we’re not sure if collectors will be out there paying high premiums for “collectible” coins.  Stick to coins that are very near the spot price of gold.

On the other hand, certain coins command a slightly higher premium because they are well known around the world.  Coins such as: American Eagle, American Buffalo, Canadian Maple Leaf, South African Krugerrand, Australian Kangaroo, & Austrian Philharmonic are all well known coins and might even command a slight premium over the price of gold when you sell them.  Any form of gold has the value of gold as long as you are certain of its gold content (make certain you’re buying from a reputable dealer), but could be slightly harder to sell one day because it might not be quite as recognizable.   Recognizable coins will hold value anywhere in the world.  With an unrecognized coin, you might have to seek out certain dealers who can analyze the coin to sell it.  Still gold is gold, so the basic thing you are looking for is the price which you can buy the gold for.

Costs:  We’ve found mark ups of between 4 ½% and 7% on physical gold coins.  The market can change at any time and the more people begin to demand gold, the more we would expect this mark up to increase.  Feel free to check with several dealers to find the one who you are both comfortable with and who has a fair mark up.

This post is Part 10  in the series A Few Ways to Prepare. To continue with this series, click on Pt 11. To use this as a growth tool to better understand your own calling, you might start by reading Pt 1, Pt 2, Pt 3, Pt 4, Pt 5, Pt 6Pt 7, Pt 8 and Pt 9.

Photo credit: pbo31

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