Gold has been used as currency since the beginning of human history. It is the only currency that has always maintained a value in human society and it continues to be valuable today. Its perceived value fluctuates up and down but it can always be used to buy and sell things and is always a good investment. This allows its price to move about based on supply and demand. Gold will continue to hold steady as a valuable form of currency and vehicle for investment. You can’t go wrong when investing in gold. If you are interested in getting started with gold and increasing your wealth, here are the basics of beginning a successful gold investing project.
How to Get Started Investing in Gold
The first thing to remember about gold is that it maintains its same value all over the world. This is unlike paper currency, which fluctuates in value depending on the country in which it is used. Second, gold doesn’t pay interest. You can’t get any dividends from gold ownership. The only way to make money from gold is to buy it when its prices are low and sell it when prices are high.
New gold investors should avoid the commodities market like the plague if they hope to hold onto their gold. While you can make a lot of money with commodities, it is easy to lose it all with just one bad trade. The commodities market takes time, practice on paper, and patience to learn. You must bide your time until you’ve learned the commodities market well and are confident in your abilities before you enter it. Once you’re an expert, however, you might be surprised at how much money you make.
Beginning gold investors should use one or more of the following methods of investing to get started and learn the basics of the gold market without exposing themselves to too much risk:
1. Physical Gold
This is by far the best way to get started with investing in gold. You can buy physical gold in bars, bullion, coins, and jewelry. It takes a sum of cash equal to the value of the physical gold you want to buy to get started. This means you need to have some money set aside for this purpose before you start buying gold. Once you have it, however, you will have a measure of protection from inflation and the potential collapse of your local currency. You can also trade it in for cash when gold prices go higher and make a profit from it. It is important to remember that governments sometimes confiscate the gold of private citizens in times of crisis. To protect all of your gold, you should keep a certain amount with you in a safe at your home. Once you start to reach high amounts of gold at home it is time to start keeping the rest with an international bullion handler for safekeeping.
2. Gold Mining Stocks
This is a more risky strategy than just owning gold outright. However, it is suitable for beginners who are willing to take a little bit of risk. It’s not hard to get started. Buying stocks in gold mining companies gives you some leverage in the daily fluctuations in the price of gold. These stocks are valued by both the price of gold and the price of the overall stock market. It is generally better to own physical gold first and then start dabbling in the world of gold mining stocks. The ideal is to own a mix of both physical gold and stocks in gold mining companies.
3. Commercial Bullion Banks
Commercial bullion banks acquire and hold gold for you. You don’t have to take physical possession of the gold when you use these banks. However, taking possession can be an option. You can also choose to take physical possession of some of the gold you buy and have the bullion bank hold the rest for you. This keeps your gold holdings diversified and therefore more safe than keeping it all in one place. You can also liquidate your gold into cash at any time with your bullion bank. In fact, it is easier to do this with a bullion bank than trying to cash in physical gold on your own. Monex is a trusted company for buying, holding and selling gold and there are lots of other bullion banks out there. Monex gold prices are monitored closely throughout each day, which makes it possible for you to buy and sell quickly as prices indicate. Not every bullion bank will do this for you so it is recommended you use one that will.
Reasons for Owning Gold
Gold is an excellent way to store and preserve wealth. It won’t erode in value due to inflation like paper money. It is also essential in times of social anarchy. When governments are overthrown or the local currency loses its value gold will always be able to be used as a medium of exchange for goods and services. Further, owning gold allows you to diversify your assets. It’s always been said that you should never keep all of your eggs in one basket. This same wisdom holds true with investing. The more mediums of investment you use, the more likely you are to preserve some wealth if some of your assets become worthless.
It is highly unlikely that all of your assets will become worthless at the same time and you will always have something of value if you own gold. Gold is, in essence, the purest form of money and has been since ancient times. You can spend it anywhere in the world without having to have the local currency. It is universally valuable.
Disadvantages of Owning Gold
While gold is one of the safest investments you can make, it isn’t without its particular drawbacks. Some of the disadvantages of gold include:
- Frequent fluctuation in its universal value. If you need to sell gold when its price is low, you may lose money if you originally purchased the gold when its value was higher.
- You have to exchange gold for paper money or coins to spend it in most countries. Only a very few places will accept gold as it is to buy things. This may change in times of social chaos. However, needing to exchange gold for an equal value of local currency to spend it is the norm.
- Gold can be stolen. Pirates weren’t the only ones who used to bury their gold to keep it safe. Regular people throughout history have used this same technique. Gold must be protected and that means keeping it out of the hands of thieves.
A Primer on Gold Prices and How They Go Up
Gold prices are expressed by the ounce and the price per ounce often changes several times a day. Right now, gold prices per ounce are the lowest they’ve been in many years. This has made some investors nervous and they’ve sold their gold holdings. However, this is a perfect time for a beginning gold investor to enter the market. While gold prices may be low now, they will go up again. It’s inevitable as it always happens this way. A beginning investor can get gold very inexpensively now and cash in for a considerable profit when prices go back up.
Investors can also enter the gold market at a low price now and continue to hold as long as they want while gold prices fluctuate over the next several decades. Gold is always good as back-up currency and wonderful to have in case of an emergency. Buying and selling some while holding some is an excellent investment strategy.
When gold prices are low, it is usually only the very wealthy and businesses that think to invest in it. They start buying gold and this drives up gold prices. Medium-grade investors jump in next. By the time the regular investors on the lower end of the income scale jump in, gold has usually shot up in price by a large amount. That is why it is best to start investing now. It’s what those who are “in the know” are doing and you’re positioning yourself to make a lot of money later by investing now. Getting in before the masses do is key.
How to Make Money with Gold
Always start your gold investing by purchasing physical gold. Then hold onto it as its price goes up and down. Don’t let a large drop in the price of gold scare you into selling yours. You’ll regret it later when prices start to go up. Understand that you are investing primarily to preserve your wealth. This is the basis of what gold does in society. Gold retains its value as other currencies lose theirs. Buying gold is a protection against inflation and devaluation of other currencies. This is why you must hold on to most of yours. It is all right to sell some every now and then when you see you can make a great profit on it. This can be part of any good investment strategy. However, gold is something you want to hold onto much longer than other investments because it protects your wealth much more than other investments.