No matter where you are in your retirement investing, you must start thinking about diversification. Traditional portfolio managers tend to direct their clients towards products they have the ability to buy and sell, ultimately gaining a commission along the way.

It is up to you to look at your portfolio of investments and allocate funds both in the market and outside the standard 401(k) or IRA retirement plans to have the best balance and diversified portfolio.

Physical assets can diversify your retirement savings, provide balance to your portfolio, and stabilize your retirement accounts.

By definition, diversification “is the act or process of manufacturing a variety of products, investing in a variety of securities, selling a variety of merchandise, etc., so that a failure in or an economic slump affecting one of them will not be disastrous.”

This graph from Fidelity clearly shows diversification into the four categories. But nowhere do they speak of diversification in commodities, such as precious metals, real estate, vintage cars, or foreign currency.

In the definition of diversification, the final line states “…so that failure in or an economic slump affecting one of them will not be disastrous.”

You are now looking for alternative investments to diversify those retirement accounts and find opportunities outside the traditional stock market. We are talking about taking eggs from one basket and putting them in another for a balanced portfolio.

With the economic turmoil, inflation, and questionable returns in the market, now is the time to start looking at commodities such as precious metals to help your retirement accounts with diversification and protection.

All reputable precious metals dealers and even some brokers will suggest an allocation of physical gold or silver is 5-10% of your overall portfolio. None believe you should be 100% divested in gold or silver.

Having that balance in your portfolio will help you be a winner no matter how the stock market is performing.

By investing in physical gold you are taking control of your assets, conserving wealth, and preserving your savings for retirement.

Are Gold and Silver Good Investments

Yes, countries, banks, and individual investors have been buying and selling physical precious metals, gold, silver, platinum, and palladium for centuries. Over the short term, metals don’t move as quickly as other investments but don’t buy these expecting to make a quick buck.

Buy physical gold coins to offset any economic turmoil and inflation in the market. Hedge your retirement portfolio using a liquid asset that you control. And yes, understand that gold prices have only increased over the long term and you could have incredible gains in the future.

Get a quick look at gold prices and their highs and lows over the past 30 years in this macrotrends graph. Play with changing the years in the graph and you can see that over the past 5 years, gold alone is up approximately 19%.

The Plug has put together 12 physical gold investment topics for the beginner here in this article. Get additional information throughout this article by clicking the blue words. We will take you to additional articles on our website or to 3^rd party websites that provide additional resources.

Our goal is to get beginners thinking about physical precious metals as an investment option and to provide them with the beginning topics that they need to know and understand.

1. What's the Difference Between Gold Coins, Rounds, and Bars
2. What is the Difference Between Bullion and Proof Coins
3. What is a Troy Ounce
4. How is Bullion Priced
5. What Return Should I Expect with my Physical Gold Investments
6. Where Should I Buy my Gold Coins
7. Starting a Self-Directed IRA
8. How Much Can I Invest in Gold
9. How Does My Gold Get Delivered
10. Should I Use a Precious Metals Storage Facility or Store my Gold at Home
11. Are Rare Coins and Numismatics Good Investments for Beginners
12. How and Where to Sell My Precious Metals

If you have all the information necessary and you are ready to buy now and not wait – check out The Plugs 5 Best Gold IRA Companies page for those looking to rollover an IRA or 401(k) or read What Precious Metals Company is Best if I only have $10,000 to Invest giving you several online precious metals dealers. Don’t forget about your local coin shop and dealers. These businesses have several of the coins necessary to start your investment journey.

We speak mostly of gold in this article but the whole physical precious metals industry is what we are talking about with physical commodities. Silver is a less expensive option than gold and by reviewing our article on Buy Silver not Gold you may find a good reason to start with silver over gold.

#1 - What's the Difference Between Gold Coins Rounds, and Bars

Investors have a choice when buying their precious metals. Should they buy gold coins, gold rounds, or gold bars?

The major question for a beginning investor is, how much do you have to invest? Knowing your budget will help narrow down which choice is best when your get started.

What are Gold Coins?

Coins are minted by sovereign nations or for sovereign nations by private mints. These coins have a face value and generally get the highest premiums in the market.

The U.S. Mint produces both bullion and proof Gold Coins in 5, 10, 25, and 50 dollar increments. Each of these coins has a set amount of gold.

The primary information to take from this is that Coins are Minted by Sovereign Mints and each coin has a face value. Check out this article about the American Eagle Gold Bullion Review.

Many sovereign-minted gold and silver coins are allowable in your self-directed IRA. Verify before purchase that the coins you are looking to purchase are allowed.

Takeaway: Coins are minted by sovereign mints, have a face value, and some are allowed to be used in a Gold IRA

What are Gold Rounds?

Rounds look and even have a similar feel to coins. The major difference is that these are minted by private mints and have no face value.

For the investor, you can purchase rounds from private mints or dealers. Make sure you are looking at the gold content; is it 22 carrots, or 24 carrots, and does it have a purity of .995% gold in the round? Does the round state who produced them and stamped with what their gold content contains? Knowing this information will help investors choose the right rounds to buy.

The premiums are generally lower for rounds versus coins as the cost to produce the rounds is less than that of coins and there is no face value.

The retail price you will pay for a round will vary based on the mint and demand. That too influences the ability to sell the rounds when you are needing to liquidate. If you have unique rounds you may have a harder time finding a buyer when you start looking to sell.

When selling your rounds dealers may only pay a spot price or a buy price near the spot as they will want to have room to add a premium for resale.

Takeaway: gold rounds are not minted by sovereign mints, have no face value, and they are not IRA approved

What are Gold Bars?

There are three types of bars Combi, Cast, and Minted.

Cast Gold Bars are the rawest of bars. There typically is no sheen or finish. They will be stamped with the purity and how much gold or silver is in the bar will also be stamped on the bar.

Minted Gold Bars are finished and have luster for beauty. These bars can come in all sizes and will have purity and how much gold or silver is in the bar stamped on the outside.

Combi bars are smaller, some as small as a credit card in size. These bars are constructed where one could break off smaller 1-gram pieces of gold. The bars are stamped with purity and show 1 gram on the bar.

Takeaway: Gold bars may or may not be a good choice. Newer investors should stick with smaller quantity bars or coins. Sizes that are easily bought or sold to local coin dealers.

Beginning investors, with less money to get started with, may find the gold bars are too expensive and therefore coins are a better choice. Investors with a large sum to invest in physical gold or silver could look at bars being a better option for two reasons. First, the premiums are lower and you therefore can get more gold for your buck. And two, you have less concern over storage space with bars as they take up less space overall than several individual coins.

#2 - What is the Difference Between Bullion and Proof Coins

Have you come across these terms in your readings?

Having an understanding of these differences will help you invest wisely. We have a more comprehensive overview of this topic here at Gold Bullion vs Gold Proofs vs Brilliant Uncirculated Coins.

In the meantime get a quick look at the differences here.

Bullion Coins

The term bullion is used in two ways throughout the precious metals industry. First, it refers to bars or ingots that have not been manufactured into coins. Second, it refers to Bullion Coins. Bullion coins are fractional interest coins that have at least 99.5% purity.

The term bullion can be interchanged describing raw precious metals or it could refer to a coin that has been minted.

In the United States Mints, the majority of the gold or silver coins produced are bullion. These bullion coins are sold to dealers in the U.S. and around the world who in turn sell to individual investors.

Proof Coins

Proof Coins are similar to bullion as they are produced by U.S. Mints. Consumers can purchase Proof Coins directly from the US Mint online or through dealers. You can visit the US Mint page today and find a selection of proofs or uncirculated coins to purchase. The product will vary depending on the time of year or the number of coins produced. There are fewer proofs made than bullion and the minting process is more extensive which in turn increases the price of the coins.

Investors can find proof coins on the market at local coin shops or online from a variety of dealers. Understanding that the process of producing the proof coins is more complicated and time-consuming than bullion and therefore the premiums for these coins can be greater.

Takeaway: Choose your coins wisely. Remember bullion coins typically have a lower premium than Proofs. There are few proofs coins, the premiums are typically higher, and based on the limited number of proof coins made there could be a higher value as they start to fall into a collector’s investment portfolio.

#3 - What is a Troy Ounce

A term referenced for every coin, round, or bar in the precious metals industry is an ounce. Everything is sold based on the ounces of gold or silver in the item.

The ounce referenced in the precious metals and commodities industry is a troy ounce.  The ounce stamped on the coin or bar is based on the amount of metal in that item. Ultimately the price of that coin or bar is based on the purity of the gold or silver, but also how many ounces of that gold or silver is in the item.

A Troy Ounce is roughly 31.1 grams. This is heavier than a standard ounce used in weights and measurements.

A standard or avoirdupois ounce is what we typically see when measuring food or other items. This ounce is roughly 28 grams. The only time this ounce is not used is when measuring precious metals such as gold, silver, palladium, or platinum and in those cases, the troy ounce is used.

Therefore 1 troy ounce of gold is heavier than a standard ounce. There are 14.6 ounces in a pound compared to the 16 standard ounces.

James Chen wrote a great piece at Investopedia.com/terms/t/troyounce.asp where he gives details on the troy ounce.

Takeaway: Ounces in the precious metals industry are different from an ounce of food. 

#4 - How is Bullion Priced

Ready to buy, but can’t figure out why one coin has a different price than another. They both are 1oz gold coins. So why is there a price difference?

This topic is one of the most confusing to new investors and typically brings IRA investors to their knees when they read their IRA statements.

What is written and spoken about when it comes to precious metals is the spot price. The spot price is determined by the forward month’s futures contracts being bought and sold and is ultimately based on supply and demand.

The spot price comes from commodity exchanges in New York, Chicago, London, Zurich, China, and Hong Kong.

Since commodities are bought and sold daily, these exchanges dictate the spot price. The bottom line is the spot price is based on expected needs for the metals in the future.

What you Need to Know

The final price you will pay for your gold coins is based on the spot price plus any premiums attached. There is a cost to produce the coins and the profit the sellers are looking to get in the market.

If a dealer purchases larger quantities of gold bullion from a mint, their position in the metals may be lower as they probably paid a smaller premium for the larger quantity purchase.

When a dealer is buying and selling bullion from investors or banks, they may have paid a higher premium for the coins, and therefore when they resell the items the premium will be higher.

Bottom Line on Premiums applied to the Gold Coins

The premium applied to the coins can and will be different at times. When purchasing bullion you should always know the spot price of gold (https://finance.yahoo.com/quote/GC=F?p=GC=F&.tsrc=fin-srch) or silver (https://finance.yahoo.com/quote/SI=F?p=SI=F&.tsrc=fin-srch) is before you make a purchase.

If the seller isn’t providing a clear indicator of their premium you can determine the premium with some quick math.

Example:

The quoted spot price is for 1 troy ounce of gold. So if you know that a troy ounce of gold is trading at $1,800 per ounce and the coin is 1 ounce of gold then you know the coin should cost more than $1,800 with the premium.

If the coin is selling for $2,050 then the premium for that coin is $250 ($2,050 - $1,800). Or another way to look at it is you are paying a 13.89% premium for that coin.

When you check around for pricing do a little math to understand the premium. If you look at the premium for the coins or bars versus the actual price you may find discounts in the market.

Understanding the Bullion Price when Selling Back The Coins

When you are ready to sell back the coins to the original dealer or another buyer you will be quoted a price. That price may have a different premium attached because the seller will look to get the coins for less so they can mark up and resell.

Just because they are selling the same coin at a higher price doesn’t mean they will buy back your coins at that same price.

Knowing your purchase position for each coin or bar will help you with dollar cost averaging your investments and knowing when to buy or sell certain investments. Track your purchases to take advantage of any bumps or dips in the market.

#5 - What Return Should I Expect With My Physical Gold Investments

When you purchase coins, bars, or rounds there is no expectation of appreciation for these assets. No one has been able to predetermine the future and no past results will indicate similar future results.

From a beginner’s view of expected return, you need to consider several factors. What price did you acquire the metals at and what has been the historical return on the asset over the past 12-60 months?

If the market has been trending down, there is no way to determine where the bottom will be or when the price will turn and go up.

Many times you are a speculator when you purchase precious metals. But one thing you are doing is preserving your cash position and diversifying your portfolio.

Over the past 30 years, the price of gold has increased by over 360%. Recently the price has climbed again but we are off the high of $2,390 per ounce in August of 2011 and have been so for some time. This tells us that the price of gold has more upside in the market.

As a beginner investor, you should understand why you are buying gold or silver.

• Reason #1 – conserve wealth
• Reason #2 – diversification of portfolio
• Reason #3 – acquiring a physical asset, that you control
• Reason #4 – hedging inflation
• Reason #5 – saving for the future
• Reason #6 – high liquidity
• Reason #7 – stable asset

Takeaway: Returns on precious metals investments are similar to those in other markets. Sometimes they are up and sometimes they are down. Remember the physical metal prices will change based on demand and supply, along with market trends, the value of the dollar, and the economy overall. Purchase with the intent to be a long-term investor and stop worrying about minor changes in the spot price overall.

#6 - Where Should I Buy My Gold Coins

When you have educated yourself enough, it is time to start looking for an honest and reputable dealer to purchase your gold or silver coins.

Going into the purchase with the knowledge you have obtained you can head to several different dealers both online or locally near your home.

If you are spending less than $10,000 the companies in this article can help you out.

If you are looking to spend more than $10,000 and even look into opening a precious metals IRA check out our 5 Best Gold IRA Companies article.

If you want to start looking at coins, head to your local coin dealer. A good coin dealer will want to educate the buyer on the coins they have to offer and the ones you wish to purchase. Get your feet wet by buying one or two bullion coins to see how reputable the local dealer is and how much they are willing to educate you on.

Takeaway: We do not recommend numismatic and rare coins to beginner investors. Many local dealers will suggest these types of coins that are available in their stores. While there are times you may make a profit from one of these types of coins, the likelihood is slim as the local coin dealer will generally market these types of coins up to make a hefty premium. Take any information obtained and do your research at home if you question anything the dealer says about a coin or bar.

Stick with coins that are found everywhere and priced with a premium above the spot of no more than 10% - 12%. IRA-eligible gold or silver coins are the most recognized and you can sell them quickly if you need cash.

#7 - Starting a Self-Directed Gold IRA

Deciding to commit to investing in precious metals IRA is a great decision. If you have purchased coins or bars along the way with cash but see the advantages of having an IRA then it’s time to get started. Here are the steps for an IRA investor.

• Step 1 – Find a custodian or trustee
• Step 2 – Open a self-directed IRA Account
• Step 3 – Fund your account
• Step 4 – Purchasing your metals
• Step 5 – Choosing a Depository
• Step 6 – Ship metals to Depository
• Step 7 – Reviewing Monthly Statements

If you think these steps may be difficult and not worth the effort on your own, understand some companies will help you start your Gold IRA and walk you through the process. Having help from one of these companies will make the process smooth and easy. Check out our 5 Best Gold IRA Companies for our choices of the best available today.

Remember a couple of keys when owning precious metals in a self-directed IRA. You are in control of the assets but with that control comes the need to manage your account. Understanding the IRS requirement and being clear on all the fees you will be responsible for paying the custodian and depository.

Unlike a 401(k) or a mutual fund in a traditional IRA, you control the investments by buying and holding or turning the investment over.

Advantages of Self-Directed IRA

1. You can own a variety of investments
2. Tax advantages on the earnings and losses
3. Invest in metals you have an interest in (as long as they qualify)
4. Dollar cost average purchases over time

Disadvantages of a Self-Directed IRA

1. No collectibles (review the IRA/IRS requirements for SDIRAs)
2. Maintenance Fee could be higher (choose custodian wisely)
3. Cannot hold precious metals personally (must be at a secured depository or vault)

The bottom line when deciding on a Gold IRA is to understand your investment plan. There is no need to open an account if you are not 100% sure you are going to invest and hold gold and silver for some time.

Eligibility Requirements

• You need to have earned income if you are self-funding the account
• A current 401(k) account that allows for rollover while still employed
• Prior Employer 401(k)
• You have a current IRA to rollover funds

Takeaway: A precious metals IRA is a great choice for those looking to invest for the long term and those looking to diversify from their current portfolio. Moving 5-10% of your retirement into another retirement account is not complicated and you have no tax consequences for the rollover. 

Self-Directed IRAs and secured storage facilities will have fees for managing and holding your investments. Understand the cost associated with opening the account and storing your metals before making any decisions. 

#8 - How Much Can I Invest in Gold

This is an excellent question for both beginners and advanced investors. The answer is short and sweet…

You can invest as much as you choose in gold, silver, or any other precious metal available.

There is just one point to make. If you are starting a new self-directed IRA from scratch you can only invest the IRA/IRS allotted amounts per year. You have to have an earned income for your contributions and the max contribution is $6,500 for those under 50 and $7,500 for those over 50 as of 2023.

If you choose to roll over a current IRA or prior employer 401(k) then you can roll over an unlimited amount without tax implications at the time of the rollover. Some IRA custodians require a minimum requirement, but for those choosing to do all the legwork themselves in the set-up and funding of the account, make sure you understand all the requirements.

Work with a company that has a good reputation check out our gold IRA review to see whom we suggest and why.

#9 - How Does My Gold Get Delivered

Delivery from online purchases of gold or silver will vary depending on whom you are working with and the reputation of the company.

Make sure you review the BBB comments and complaints for each and every company you are looking to purchase from. There is a large percentage of complaints that are related to how long their gold took to be delivered and how the package was delivered.

The most reputable companies will be responsible for the delivery of the metals till you sign for the package.

Packages are typically shipped with non-descript packaging so carriers are not aware of the contents.

Cash purchases could be delivered by USPS, UPS, or other delivery service providers to your home or office depending on your instruction.

IRA Purchases would be shipped via secured storage trucks or via mail systems depending on the number of metals being purchased and delivered.

When investing through an IRA you cannot hold the metals personally so you will have to choose a storage facility where the metals will be delivered. Some Gold IRA companies have their own secured storage facilities and you may choose to use one of them. Ultimately, it is your choice when deciding which facility will hold your metals.

#10 - Should I Use a Precious Metals Storage Facility or Store My Gold at Home

When starting out investing in precious metals you need to think about how you plan to store your assets. Paying with cash allows you to choose to keep the metals at your home in a safe or if you are purchasing a large number of metals you may choose to use a secured storage facility or several facilities around the country or the world.

When investing through your self-directed Gold or Silver IRA you are required to use a secured storage facility or precious metals depository. These facilities are secured and insured, and some allocate your metals while others co-mingle the metals.

Choosing a secured storage facility can be easy if you are working with a Gold or Silver IRA company. They may have one or more facilities they work with to suggest and that makes the process easier.

If you have a vault, you currently use, you can have your metals delivered to that location and keep everything in one place.

When speaking with your gold IRA company or any secured storage facility ask them about the procedures and how they separate your metals from others.

Is the Gold Allocated or Unallocated? These are the two types of storage options and you want to make sure you understand each. 

Allocated Storage is when the coins or bars are marked with your name and placed in a separate area of the vault. They are tagged and stored in a box or safety box away from the other metals. You will get the exact metals that you purchased and shipped to their facility.

Unallocated Storage is when the coins or bars are co-mingled with other metals based on size/weight, refinery, and minted year of coins. Your purchased coins or bars once delivered go into the facility and you are allocated a certain amount based on what you purchased. At the time you choose to withdraw the metals you are given your allotted amount.

Understand in unallocated storage the likelihood of receiving your exact metals is slim. But, if you are investing in bullion you may only care that they have the metals, and having it separate from others may not be a concern.   

The fees of an allocated over unallocated storage facility could be slightly higher. But the main difference you should know is that your gold should be allocated to you in your name or by account number if you are dealing with proofs or high-grade BU coins.

Point of concern for depositories! Make sure you know how the coins or bars will be stored if you are working with a new IRA precious metals company or any online precious metals dealer. If they indicate they have vault storage, be cautious and verify if they are putting coins in the vault or if there is just a statement that you have so much allocated to you in their vault.

Malicious and untrustworthy companies, in certain circumstances, don’t own your coins or bars when they sell them to you. If they say your bullion is safe in their vault and can be delivered at any time to you that may not be true. If you choose to pull your coins and have them delivered they may need to go into the market and buy them before having any delivered.

The larger concern is if everyone wanted their physical metals at the same time. If a business is not putting physical metals into that vault and they are only allocating an amount to you, if something happens in the economy and everyone want their metals at the same time, they may not have enough for everyone.

This guide is for the beginner to make sure they are getting a high level of important information. Just be aware of these situations so you can speak intelligently about storage and vaults to whom you are buying your metals.

#11 - Are Rare Coins and Numismatics Good Investments for Beginners

Yes, these types of coins are good investments.

No, they are not good investments for beginner precious metals investors.

If you are just starting and you have minimal knowledge and experience with rare or numismatic coins then The Plug suggests you stay away from this type of coin investing.

Investing in IRA-approved bullion or proofs should be where new investors start their journey.

These types of coins are always in demand. You can always find more to buy and you can easily find a buyer for those you own.

Rare Coins and Numismatics take a deeper level of education and knowledge. When investing in these you may be dealing with a 1 of 100 or even 1 of 1 scenario with your coins. The market for these types of coins is smaller and while there are buyers for these types of coins, the price can fluctuate for many reasons.

Premiums for rare coins tend to be very high compared to the value of their metal. Consider what the coin is worth if melted down for the gold or silver inside. Then look at the price “as-is”. If a deal seems too good to be true, then walk away and educate yourself on that coin before making a purchase.

#12 - How and Where to Sell My Precious Metals

At some point in the future, you will choose to sell off some or all your precious metals. That’s assuming you don’t pass the investments to your family or friends in death.

Start the process by re-educating yourself on the spot price, bid price, and buy price of the metals. Remember there is a maximum buy price the dealer will pay for your metals. Buyers don’t speculate on the future of the bullion and pay current retail prices for your gold. They are in a business and need to purchase below retail prices so they can make money on the next transaction.

You typically won’t get a large premium above spot for your metals as that is what the dealer uses for their profit when they resell the coins or bars.

When holding the coins or bars yourself, look to local coin buyers as an outlet for sale in smaller quantities. These local coin dealers will likely have a limited supply of available funds so if you have many coins to sell you may need to find a larger online dealer who has the funds to buy all your coins.

Self-Directed IRA investors will look to the online precious metals dealers they originally purchased from when selling their investments. Many reputable dealers will give a buyback guarantee to their clients. They provide this guarantee because they want your gold or silver when you are ready to sell. They have other clients that are waiting to buy and having your gold allows them to sell more in the future.

In an IRA you can buy and sell bullion at your pleasure. You can time the market and either make a profit or loss on the coins. Either way, you acknowledge the transaction but until you start taking distributions the account takes the hit and you don’t pay additional taxes.

Selling to a precious metals dealer, unless you purchased the coins and bars from them originally, you will need to go through a process before the transaction can be completed.

Process of Selling to online dealers

1. You will call and speak with a precious metals buyer.
2. They will offer a buy price based on how you describe the condition of the coin(s) - you choose to accept or decline the offer.
3. You will be required to send the coin(s) or bar(s) to them for inspection and appraisal.
4. They will acknowledge the condition. Refute or accept the coin condition.
5. You will be paid for the coins.

When you sell to an online dealer, that you have no history with, the sale process could take 7-20 days or more depending on delivery and how quickly you get the coins into their possession.

Selling back to the dealer you bought from can shorten the timeframe of the transaction because they know what you purchased in the past and have a record of the condition.

The dealers that are also holding your coins in their vaults will have the quickest process and can fund your account within hours.

Selling to local coin dealers can be a much quicker transaction than working with a new online dealer. Having the ability to take the coins or bars to them directly with allow the dealer to inspect them and provide you with a quote.

When selling precious metals make sure you do the following:

1. Check the credibility of the business you are working with. Check their BBB page, check Yelp reviews, check their Google My Business Page and reviews, check their Facebook page, etc... check all the sources available. 
2. Educate yourself on the spot price and what your coins are retailing for in the market.
3. Don’t be desperate to sell!
4. Be willing to shop around for the best deal. Check other coin dealers in the area. The more shops in your area the more competitive the prices should be.
5. Get a clear understanding of the business’s process for the purchase and timeline to get funds into your account.
6. Consider walking away from the transaction if it doesn’t seem right.

Final Thoughts for the Beginner Precious Metals Buyer

There has been a lot of information thrown at you in this article about what beginner precious metals investors need to think about or be educated on, before investing in physical gold. The topic information provided to you is a high-level overview and does not get into the cracks of all the possible issues, concerns, information, and coins on the market.

The main takeaway for new investors should be education. The best online precious metals dealers will educate you before they will sell you a product. They want their clients to know how and why they are choosing to add precious metals to their portfolio. This type of dealer is concerned over their reputation as well as your investments.

Several retailers put their prices and product availability on the web and give buyers options to purchase at any time 24/7. This is good for those educated on pricing and the market and bad for those not educated.

If you come across a gold IRA company that has a large minimum investment requirement that is a good thing. Their clients are the ones that have the most knowledge and understanding of how the precious metals market works and how it will relate to and benefit their portfolio. Don’t shy away from them.

Be clear and understand the spot price and premiums attached to the product you are considering buying. There is nothing wrong with price comparison but get an apples-for-apples comparison. Don’t try to compare two different coins or bars and justify the pricing.

Remember coins are different from rounds and not all investments will be allowed in your self-directed IRA.

And finally, remember that investing in physical precious metals is a long-term investment choice. You should not invest in physical metals if you plan to trade them often. That type of investment may be best for those looking at ETFs or individual mining company stocks.

The Plug hopes your knowledge and understanding of the precious metals industry have increased by reading this material. We know you learned something, and you can use this information to be well-informed on your first or next purchase.

The information in this article is provided for informational purposes only. The Plug is not a tax accountant or advisor, so we do not provide advice on which company or investment is right for you to purchase.

Top 7 Investment Strategies For Gold Investors

Gold has existed from ancient civilizations until modern times; it has always been a currency of preference and for large banks or governments, a significant investment to back their cash positions.

In modern times, more individuals are buying gold to hedge inflation. Concerns over the devaluation of the dollar and the potential of a market collapse have moved investors into physical gold. 

But what other investment options are there for gold? In this blog, we will provide you with our seven most invested gold markets. Your investment dollar could be diversified into one or several of these options. Understanding the value of gold is important to understand the upside of your investments. 

In general, physical gold in its most natural state is valued based on the Spot Price. When gold turned into physical bullion coins, bars, jewelry, or notes then the value could be higher than the spot price. The value might be higher due to the demands of production or the rarity of an item. 

Investing in ETFs, Futures, and Gold Companies doesn't involve owning of physical gold products. You own paper or interest in a company and your future earnings or appreciation in value is based on the production or success of either the stock market or the company itself.

Gold has always been a source of wealth; many financial advisors suggest that investors should diversify their portfolios. Having a portfolio of allocated resources, including Gold; in so doing, you will have diversified your portfolio, and having the portfolio diversified will help reduce any negative returns over a period of time. 

1. Gold Jewelry

Approximately 49 percent of gold globally produced is used to make jewelry. Gold jewelry is primarily the most frequently purchased and sold form of gold investment because it can be easily acquired. Generally, any piece of jewelry at 14k or higher is considered a gold investment. The demand for jewelry products will increase with time because of the growth of the population globally.

However, there are challenges when buying gold jewelry. The retail price markup over the spot price for gold is substantial. In addition, understanding the actual amount of gold within a piece of jewelry is not always clear. They may say the item has 14, 18, or 24-karat gold, but do you understand the actual amount of gold within the piece? 

• 14-karat gold item is generally 58.3% gold and the remaining is different alloys.
• 18-karat gold item is 75% gold with 25% other alloys 
• 24-karat gold item is 100% pure gold with no other metals

Besides the gold content, jewelry value is based on the rarity of an item. An item made by a known jewelry expert may fetch a higher value because there could be only one item made. The more universally found an item is, the less rare it becomes. When there are several thousand similar items you would look more at the value in gold over the value of a rare jewelry piece. 

When looking to sell a piece of jewelry you have two options:

First, is there value as a jewelry piece? If there is value as jewelry you could sell it to a local jeweler or pawn shop, or if extremely rare have the item auctioned off. 

Second, what is the melt value? When selling scrap jewelry the value is based on the gold content and the melt value is based on the unit of measure of gold, multiplied by the spot price of gold. The end paid price to you may be slightly less as there is a production process to melting the gold for a new life.  Gold jewelers and pawn shops are good locations to move scrap gold jewelry. Understanding the process will help you understand the price offered by these sources.

2. Gold Futures

Gold futures means contracts for buying and selling Gold at a certain period. Each contract is represented by a certain amount of Gold; it is paid through several dollars or the physical Gold.
Gold futures are a good way of predicting Gold's value if it is rising or falling. However, physical delivery is not part of the gold futures process.

Most investors take leverage on gold futures because of their importance in the market. Gold futures ownership is also cheap, meaning you can own a lot of gold futures with a bit of cash. If you invest in gold futures and the curve moves in the direction you have predicted, you will gain huge profits quickly. However, sometime you may risk your money if the curve goes opposite against your prediction.

To avoid losing your money, you need to invest more money to maintain the trend, or the broker will close the trade because your fund is insufficient. You need to note that gold futures can generate a lot of money and can also lead to a loss of your sum amount quickly.

Investing in gold futures is not always essential; experienced traders need to invest. You also need a licensed broker certified for futures trading; not all brokers provide these services.

3. Investing in Physical Gold

Physical Gold is worth investing in because it's universally accepted. When purchasing from sovereign nations you can purchase coins with a face value. Having these coins allows you to trade based on the value of the gold or the face value of the coin.

There are several sovereign government mints that produce products you can have confidence in and their process is backed by the government issuing the product.

In the United States, there are several private mints that produce gold and silver rounds and bars. These items will typically be stamped with the amount of gold per troy ounce. The value is still based on the Spot Price of Gold, however, when you purchase from a private mint your price may be less than if you purchase a coin from a sovereign government mint. 

Physical Gold can be purchased with CASH or you can invest by opening a Gold IRA. When you buy with CASH you take possession personally and are responsible for the items. If you buy within your Gold IRA you will be required to house the gold in a depository. 

By buying Gold in a self-directed IRA you get all the advantages of a typical IRA. Defer the gains and losses till you start taking your distributions. You own physical gold in the IRA, so when it's time for your distribution you have the choice of taking the physical gold or selling the gold and taking a cash equivalent. 

How do you know what's best for your investment portfolio? Check out The Plug's 5 Best Gold IRA Companies review. We provide the best companies that can help you set up a Gold IRA but these companies are also the best to purchase with CASH. 

The options for buying physical Gold are:

• Gold Bullion
• Gold Proofs
• Gold Bars
• Gold Rounds

4. Investing in Gold ETFs

With a gold Exchange Traded Fund (ETF), you can invest in Gold and you don't hold the Gold as a physical asset. Examples of the largest ETFs include SPDR Gold Shares (GLD), iShares Gold Trust (IAU), and Aberdeen Standard Physical Gold Shares ETF (SGOL). Most ETFs mimic the trend the physical Gold holds; others are both as shares for gold miners.

Gold ETFs are traded on the stock market; they are in liquid form and can be sold off when required. Most new investors prefer trading gold ETFs because you don't need to purchase the actual physical Gold.

They can be bought by a certified broker. Always confirm the value of EFTs on your broker before purchasing. You can include Gold in your portfolio with a small amount of committed capital. ETFs have grown fast, with many investors choosing to invest in ETFs.

There are also investment apps where you can trade easily. However, it differs from stock in that it's like a basket of funds to be invested. The value of Gold ETFs is about one-tenth of an ounce. You need to find the appropriate broker account to purchase or sell your ETFs, just like the stock exchange market. It's more cost-effective than owning coins or bars directly.

Gold ETFs investment is the best way of investing Gold for newbies. The initial investment is almost the price of a single ETF share. The expense ratio of these funds is often approximately 0.65%, less than any other expense and investment fees such as mutual funds.

The other benefit ETFs hold over billions is that they can be exchanged for cash at the market price. You can trade your fund any day on the market when it's open for the prevailing price. They are also more liquid than physical Gold and can be traded in the comfort of your home.

While being a good option, gold is sometimes volatile, and investing in ETFs allows you to avoid the biggest physical risk of owning physical g. However, this option is influenced by the market and by the government's involvement in the dollar. Understanding how to trade ETFs will help you use this method as a viable option for your investment portfolio. 

5. Invest in Gold Mining Stocks

A mining company has a risk of low return on investment; if the management is poor. Examples of mismanagement risk include companies falling into debt and environmental calamities or legal policies that affect mining operations.

Additionally, gold mining stands out more than gold ETFs or physical Gold; when the prices of Gold are falling, a gold mining company can impose and reduce expenses to maintain profit. If you are planning to invest in gold mining companies, consider the return from mining stock depends on the return generated by the company, not on gold prices. When investing in gold mining, consider the two aspects:

• Companies that mine in remote areas of the world increase expense on investors reducing profits.
• Geopolitical unrest in a location where the Gold is mined put a halt to the operation.

6. Gold Certificates

The Perth Mint Certificate Program is a document issued by the government to back up the precious metal credential program worldwide. Investors are allowed to own and invest in grade gold reserved in the vaults in the Perth Mint of Western Australia. The Gold is reserved and stored in a governmental mint; the Lloyds of London also protect it.

The Gold is not owned or located by the investor; this means you don't have the right to own the actual Gold, you are the legal owner, but the account provider is the custodian. Most investors prefer owning a gold certificate because there are no initial or ongoing shipment charges, custodian fees, and insurance interest.

This is the most effective way of investing because of the cost-effectiveness of gold ownership over longevity. Gold can be easily transferred to an allocated account by paying a small fabricated fee if the investor sees it necessary.

In the United States, there is no current or ongoing gold certificate program by the U.S. Government. Issuance as U.S. currency lasted until 1934. The certificates represented the amount of gold owned by the individual. Individuals purchased certificates ilo taking physical gold possession. Many chose this option over physical ownership as it was safer and more difficult in those days to transport coins or bullion safely. 

The U.S. Gold certificates were backed by gold coins and bullion stored by the U.S. Treasury. Today, the certificates are no longer redeemable for gold coins or bullion. However, all certificates are considered legal tender and can be redeemed for their face value. 

In 2019, Goldback company in Utah started producing Notes and selling them in the state. Initially planned for just Utah the company produces Goldbacks for four different states including; Wyoming, Utah, Nevada, and New Hampshire. Are you interested in more information regarding Goldbacks? Check out our review of Goldbacks here. 

7. Investing in Paper Gold

Another way to invest in gold is through companies that mine Gold or explore new gold deposits. As an investor, you have the option to choose from both miners and explorers. You can decide to diversify your investment in numerous gold mining companies. However, investing in a miner exposes you to more risk than investing in Gold directly.

You can also invest in Gold via financial products such as spread betting, futures, and options. You will be able to bet on the future trends in the gold price with all these products. In these markets, you don't have ownership of any physical gold.

The advantage of the product is that it gives you the leverage power on your investment. You can borrow from your invested company to boost the bet possibility. If the price goes in the direction you predicted, it will boost your profits; if it goes against the direction, you bet you will lose your cash. You could lose the entire sum of the original investment.

Why is Gold So Valuable?

Gold has always been valuable since it was first mined for its luster. Uses for gold have been in currency and jewelry for thousands of years. Given the difficulty of mining, along with transforming the metal into an item of value, the process has made the product valuable. 

Since the belief is that gold is a diminishing asset, the value for investors has increased over the last 100 years. When the U.S. Government took gold from individuals the gold had value. Initially Gold backed the U.S. Dollar and most recently it is used as an investment vehicle. 

Gold backs governments and their currency around the world. Banks have millions of dollars worth of gold in their vaults backing the bank and its ability to cover the deposits in their banks. 

The price of Gold has increased by 350% in the last 30 years. The ever-increasing uses, check out the top common uses of gold, of gold has stretched the metal thin for utility. That along with the demand from investors and the cost to recover gold from the earth increasing, these all influence the value of the physical gold bullion.

Why do Investors like Gold?

• Liquidity: it is easily converted to cash.
• Value Stores: Gold allows investors to measure the value of wealth or physical asset
• Returns: Gold is verified to have high returns historically.
• Security: Because Gold is unique, they don't perform the same as stock or bond; it is not affected in an economic downturn. Investors are attracted to Gold because their wealth is safe from risk.

Reasons You Should Invest in Gold

• - Gold is in high Demand

Gold has always been highly prized in ownership or possession since ancient times. However, with the revolution and change, the mining industry is dwindling. Miners no longer gain huge profits like before; change in climate due to environmental factors, safety reasons, and political unrest has affected them. However, this challenge has not changed the fashion industry's Demand for Gold.

Many companies have invested in Gold more than before. They use it as a security for uncertainty they expect along with saving and investment financial transactions. Due to the rise in Demand, the prices and value of Gold have gone up in contemporary times.

• - Inflation Proof

Compared to other investments which are vulnerable to inflation, Gold is used to hedge inflation. Whether the currency value drops in value or increases, Gold is not affected by the outcome of the uncertainty occurred in the country. According to historical data, precious metals are recognized for their stability even during economic drawbacks.

Unlike any other physical asset that depreciates or loses value over time, Gold has always appreciated or retained the same value.

• - Universal Value

Gold does not lose its inherent value. Wherever you are located in the world, precious metals maintain their value as precious metals.

Gold is renowned and has value globally. For instance, a gold trinket would remain precious and valuable in Austria as it would in the USA. This is because it is universally accepted. Therefore, investing in Gold is a source of financial security and assurance in any location you move or choose to stay.

• - Highly Valued Physical Possession

Gold protects you from investment fraud, internet blackout, and market crashes because it's a highly valued physical possession. Additionally, you can take your Gold to protect it during an emergency because of ownership. Always ensure your Gold is in a safe location or insured against the possibility of theft.

• - Privacy

Most investments in the contemporary days need a third party, financial advisor, or financial institution. You will need to contact your advisor or financial institution before accessing your investment. Other external financial advisors can scam you into investing through them.

To avoid this, you can invest in Gold coins and bars personally. If you keep your transactions under the U.S. standards of $10,000 there is no reporting requirement. Therefore, you can invest and have privacy from others knowing your business. Note: this would indicate you are transacting in person and paying cash. Any form of payment or roll over from an existing IRA can be tracked. 

• - Generational Investment Option

If you are worried about your retirement age and wondering what you can leave behind for future generations, consider investing in Gold. This will act as a security asset for your children and great-grandchildren.

The price of Gold sometimes appreciates because of scarcity. Gold has increased in value over the past 50 years and there is no end in sight. The spot price will fluctuate and cannot be pre-determined. The unfortunate part of any investment is the potential for loss. 

Knowing why you are investing in Gold is key to understanding the long play in gold investments. 

Final Thoughts

Having a choice is what we are trying to express. There is no one best way to invest in Gold. There are several methods that can make for great investment choices. Understanding those methods are your responsibility. 

The Plug hopes that you have gained some additional insight into Gold Investing for you and your portfolio.