How to Buy Gold

n a post-pandemic economic climate, with war raging in Ukraine and inflation reaching astronomical rates – investors are looking for a safe bet with a proven track record.

Gold has historically been the horse to back when the going gets tough, but why do investors flock to an asset that doesn’t produce any cash flow in times of struggle?

Some see gold as the ultimate insurance, a tangible resource that’s scarcity determines its worth. It cannot be devalued by governments printing more. It is internationally recognised and has been the ‘gold standard’ of currency for thousands of years.

Ultimately, gold is dependable, and this article is going to explore the different ways in which you can buy and sell gold.

How to Invest in Gold?

There are several ways to invest in gold, such as:

• Gold bullion – buying gold bullion is the purchase of physical gold. In this instance, you can buy your gold from an online dealer, another collector, or even in most pawn shops.

• Gold futures – gold future trades are public and regulated, in which you agree to trade gold at a predetermined price for a date in the future. You are essentially predicting the price of gold for the future, by leveraging money in the present.

• Investing in Mining – exactly as it sounds, you can invest at the source with a mining business. In this instance, the price of gold influences the sale of your product, but your investment also impacts how much gold your business can mine.

• Gold ETFs – like shares on a stock exchange, you may wish to dabble in gold through an ETF that owns gold. Simply put, gold ETFs are units representing physical gold which may be in paper or dematerialised form.

Buying Gold Terminology

Before you get started, there are a few phrases you should familiarise yourself with, so you’re fully equipped to tackle the market. These include:

• Gold spot price – probably the simplest term to get your head around, and probably the most commonly used, so don’t forget it. Simply put, the gold spot price is the live price of gold at that moment. It is the price in which it could be traded at in that moment.

• Gold futures price – this terminology is mostly used in the aforementioned gold futures market, referring to the price gold will be traded at between two parties at a future date.

• The gold fix price – set at two different times throughout the day, the LMBA sets the gold fix price at 10:30 am, then again at 3 pm UK time, to be traded worldwide on the gold market.

Why you Should Invest in Gold

Unlike other assets, economic and political unrest, paired with high inflation, are seen as a positive for gold investors. That’s why the price of gold has increased so much in 2022, and why you should invest in gold if you see the current worldwide turmoil continuing.

But if the present state of the gold market isn’t enough to entice you in, there are several other benefits that keep gold at the forefront of investment opportunities, regardless of uncontrollable outside factors.

The key reasons are as follows:

• Control – when you own gold, particularly gold bullion, you have ultimate control over your wealth. There are no third-party influences, brokers, or banks – it is yours to trade or store as you wish.

• Liquidity – with total control, comes total liquidity. There are always gold traders ready to buy gold, and it is your prerogative how much you wish to sell, at what price and when.

• Diversification – investing in gold as part of a wider portfolio is a great option due to its low correlation to the stock market. Most often, when the cost of stocks and shares falls, gold rises.

However, it must be noted that it is not all wins with owning gold.

While the price of gold fluctuates, as it does not provide cash flow, it can be difficult to decide when to buy and sell it. There are no signals (such as a company’s profits or losses) that tell you when buying gold is a good idea.

Another consideration is the safeguarding aspect. This issue is quite specific to gold bullion, but just as total control over your asset is a positive, you are similarly responsible for storing it safely and protecting it.