There are several ways of buying gold and here we are going to explore a few simple ways you can buy and store gold. It is a good idea to diversity your ownership. If you dont own any gold at all I would recommend that you start with buying gold coins and gold bars
1. Buy physical gold bullion. There are a many private gold dealers that will sell you gold bullion (bars and coins). Find a reputable dealer in your community. You can also try Kitco, Bullion Direct, and CMI gold and silver, they are all well respected dealers in the industry.
When you buy gold bullion coins chose among the most common types on coins. It is easier to buy and sell commonly traded coins and you will its value with certainty. Numismatic coins and collector items can fluctuate in value and you will be paying for its rarity and not for its gold content. You may have to pay a 50% premium over the spot price if you buy a collector gold coin. Remember you are buying the coin for its gold content and not its collector value.
Dealers will charge you a small premium over spot price to cover expenses and make a profit. Find a dealer that charges a reasonable price, it should not be more than 3-5% of the purchase price
Here are some of the most common gold bullion coins
South African krugerrand is produced by the South African Mint Company. It is the most commonly traded coin and accounts for 90% of the coins in the gold coin market. The Krugerrand is available in 1/10 oz, 1/4 oz, 1/2 oz, and 1 oz denomination. Each size contains 91.67% gold and 8.33% copper. The copper alloy makes the coin harder and more durable so its more resistant to scratches and dents. A krugerrand coin with a 1 oz denomination contains 1 oz of fine gold so the size of the coin is more than 1 oz.
Canadian Maple Leaf is the official bullion gold coin of Canada and it is produced by the Royal Canadian Mint. The coin is offered in 1/20 oz, 1/10 oz, 1/4 oz, 1/2 oz, and 1 oz denominations. The Maple leaf is one of the purest regular issued coins and its gold content is 0.9999 fine.
American Golden Eagle is the official gold bullion coin of the United States and is commonly traded. It is available in 1/10 oz, 1/4 oz, 1/2 oz, and 1 oz. Each of the four sizes contains 91.67% gold (22 karat), 3% silver, and 5.33% copper. A 1 oz golden eagle contains 1 oz of fine gold.
Australia's gold Kangaroo is minted by the Perth Mint and owned by the government of Western Australia. The coin is 99.99% pure. The coins are available in denominations of 1/20 oz, 1/10 oz, 1/4 oz, 1/2 oz, 1 oz, 2 oz, 10 oz, and 1 kg
Bullion bars Credit Suisse, UBS and many other companies make commonly traded bullion bars. They range in size from a few grams to 100 oz and up. These bars usually have a lower premium than gold coins. The bars are 0.999 pure...
2. Gold EFT's. Exchange traded gold funds offers you an alternative way to own gold. They track the price of gold on a stock exchange and either hold physical gold bullion in a vault or gold certificates. There are many Gold EFTs and some of the most common are...
A. SPDR Gold Shares, symbol GLD. It is traded on the New York Stock Exchange, Singapore Stock Exchange, Tokyo Stock Exchange, and the stock exchange of Hong Kong.
B. ishares Gold trust symbol IAU is available on the New York Stock Exchange.
C. Gold bullion index, symbol GOLD is traded on the Australian stock exchange.
D. The Central Fund of Canada, symbol CEF hold gold and silver and is traded on the Canadian stock exchange.
E. ishare silver trust SLV tracks the price on silver on the New York Stock Exchange.
These ETFs offers simple and easy ways to own Gold and silver. They charge a low annual fee to cover operating costs and profit. As a result the funds will over time reduce the amount of gold that is backing your shares.
Despite the simplicity of this approach there are some disadvantages of investing in gold through an ETF. For one, you are subject to counter party risks. From what I know the management of these companies is respectable but there is still a possibility of fraud, and miss management. During a crisis the stock exchange could be closed and you wont be able to sell your gold.
Physical gold is already trading at premium above the ETFs price and in a crisis situation this premium could increase dramatically. A Gold ETF is essentially an unsecured bond and in the case of fraud or bankruptcy you would be treated as a creditor and not an outright owner of gold.
Gold ETFs is one way to diversify your gold holdings but it shouldnt be your first or only choice of ownership. Start with physical gold and then diversify into other forms of ownership.
3. Gold Money founded by James Turk is a safe and easy way to buy and own gold online. Investors in this program include DRD Gold Limited in South Africa, and IAM Gold of Canada. The company is located in Jersey (one of the English Channel Islands). They offer allocated storage and the physical gold is stored in bullion vaults in London, Zurich and Hong Kong.
Gold money works just like online banking but your account is denominated in gold grams. Once you signed up for an account you will wire your US dollars, Euros, or British pounds into your goldmoney account. You will use that money to buy gold. Gold money will then go out on the London bullion market association and fund your account with physical gold.
Each time you use your account to make a purchase it will convert the price back into gold and withdraw the amount from your account. They even have apps for your iphone so you can login and use it anywhere you want. There are not any minimum purchase or storage requirements.
Gold Money is an easy and safe way to own gold. There are no counterpart risks and the gold is insured up to $400 million dollars. The gold is stored in vaults owned and operated by VIA MAT. An independent audit is conducted every quarter and a complete audit trail is provided of all bars in their inventory. If you have enough ounces of gold you can even allocate a specific bar in their vault under your name.
4. The Perth Mint Certificate program gives you allocated ownership of gold in Australia. The Perth Mint is the only storage program sponsored by a government. The minimum requirement for opening an account is $10,000 or AUD 5000 for Australian and New Zealand residents.
An advantage of the Perth Mint is that you can buy gold at the spot market price. There is a $50 certificate fee or AUD 10 for Australian and New Zealand residents. Another big advantage is that they offer free storage. For US Citizens a huge advantage is that this is not considered a bank account and does not have to be reported to the IRS. (Disclaimer: The laws change frequently and this may change by the time you read this.)
Australian and New Zealand residents can open accounts directly through the mint. All other people need to go through one of their approved dealers. The dealer will charge you a commission when you buy and sell. It is typically 2.25% for a purchase and 1.25% for a sale but it may vary depending on the dealer.
5. Globalgold.ch is a gold storage company operating out of Switzerland. This program requires a larger minimum investment than some of other programs (CHF 50,000). Their vaults are operated by VIA MAT and storage fees starts at 0.7% annually. Global gold will also charge you a transaction cost of up to 3%. One advantage of this storage program is that you will have access to your gold at all times. You can take physical delivery and sell at any time.
6. Private vaults. There are many private vaulting companies that will store your gold. As opposed to a safety deposit box a vaulting company will insure your gold. A few reputable companies include Cisco Certis (Singapore), The storage (Hong Kong), and Das Safe (Austria). These countries have historically been gold friendly with little regulation and low taxation of gold.
In Summary Diversification of ownership will reduce your risk of loss, theft, confiscation, capital control, excessive taxation, etc. If you are new to gold start off buying physical gold bullion coins or bullion bars. You can keep them in your possession or in a bullion vault. Do not keep it in your local bank. Why? In a crisis you may not be able to get it when you need it the most. In addition, safety deposit boxes are not insured by the FDIC. A safety deposit box is not insured against theft, fire, flood, etc. If your gold is missing in the bank, it is your problem, not the banks problem!