As is true when investing in stocks and bonds, gold investments require proper education and planning as there are inherent risks when dealing with any type of investment. Even in a strong gold market the buyer needs to consider when and where to buy, when to sell and what is considered a “good” spot price.
WHEN TO BUY AND SELL
If your goal is simply to diversify and protect your wealth, which historically are two things that gold usually does well, then timing is less important.
Traditionally, early signs of economic turmoil are the best times to buy gold as they often signal an increase in its value. An ideal time to sell your gold is after the price of gold has risen a few percentage points above what it cost when you originally purchased it, when you’re in a position to turn a profit.
The right time depends on your situation and whether or not you need the cash more than the gold safety net.
Gold serves you best as a form of wealth insurance and as a mechanism to diversify your portfolio. If you’re in a position where you can say with confidence that you need to buy gold, perhaps in the wake of economic turmoil or a volatile market, there’s no reason to delay your purchase or wait for a better price.
On the other hand, selling your gold should start with a simple matter of whether your need a currency more than wealth insurance. In that situation, you’re essentially making a trade and giving your gold to a broker who provides you with that currency. This means that the most ideal time to sell would be when the U.S. dollar is strong so you’ll get the best return on your investments. However, simply needing a more liquid form of exchange is still likely be the most important factor.
WHAT’S A GOOD PRICE?
As the investor, your primary concern shouldn’t be to find a good price, because the price of gold isn’t what drives people to invest in it in the first place. Market conditions that increase the value of gold, like a weak dollar and unpredictable market, should be the most important indicators when deciding whether or not to buy.
WHERE TO BUY
- Gold Dealer: Usually available only in the form of direct ownership of gold jewelry and coins.
- Traditional Brokerage Firm: Gold IRAs, custodial accounts and mutual funds are the more traditional options offered.
- Boutique Investment Firm: EFTs and IRAs are commonly available, the smaller boutique firms will specialize in various areas of investment.
- Bank: Certificates, accounts, bullion and bars are the most common among many different ways to invest in gold with banks.