Buy Gold Online
Gold has been the foundation for monetary systems throughout recorded history. Gold’s attraction was—and still is—its ability to retain its value even in the most difficult of economic times. In the past, investors could purchase gold only through registered dealers. Today buying gold is easy to do without such an intermediary and can be a sound way to invest. This article will give you tips on how to do this.
Contents
Steps
Find a Dealer
- Do your research. When it comes to choosing a reputable online gold dealer, look for someone who is insured, has controls in place to detect fraud, and guarantees their product. An online gold dealer should exhibit the following characteristics:
- They have fair prices. Know the price of gold on the market the day you are buying, and calculate the percent over spot price the dealer charges—keeping in mind that coins will have a higher markup than bullion.
- They offer flexible payment methods. Credit and debit cards should most certainly be accepted, as should checks and wire or bank transfers. For small purchases, a check or credit card are normally sufficient. Large purchases usually involve a bank transfer of funds. Do not use money-transfer services such as Western Union. If the transaction should go bad for any reason, you'll be left with no way to get your money back.
- Make sure their shipping policies are sound. If you're taking delivery on thousands of dollars worth of gold, you'll want to know that your shipment is insured and secure. Make sure you get tracking numbers whenever a shipment is made.
- Verify a dealer’s reputation. Research testaments and recommendations from customers or other autonomous sources. Oftentimes reliable dealers post such tributes on their websites. You can also check with the Better Business Bureau.
- Exercise caution. Not every dealer is scrupulous and aboveboard in their dealings. Beware the dealer who:
- Only has a common e-mail address (i.e., Yahoo, Hotmail or Gmail) for their contact information.
- Does not appear to have a secure system for accepting credit card payments. Signs of an insecure system are no “lock” in the browser when navigating to the payment page and the “http” in the URL does not switch to “HTTPS”.
- Neglects to list delivery specifications.
- Avoid being taken. Before you purchase, contact the vendor’s customer service department either by phone or e-mail. Ask about the specific items you’re interested in buying, warranties, available payment methods and return policies. The manner in which they respond to your questions will tell you a lot about how they do business.
Know Your Gold
- Decide what to buy. Before you pull out the keyboard and start typing in URLs, do some research on products, prices, and availability. There are two types of gold that are commonly traded: bullion and coins.
- Gold bullion can be in the form of coin, or those bars you picture when you think of Ft. Knox (most often "London Good Delivery" specification). Bullion is pure gold, and is priced only by the amount of gold involved. Gold bars are recommended more for “big league” investors or collectors. Investing in this type of gold is more effective, except for the purpose of selling. Because bars cannot be subdivided, options for buyers are limited.
- Gold coins—or numismatic gold—are more collectible, have a lower threshold for entry into the investment market, and are easier to cash in. Because they can be collectible—and often mixed with other metals—their price can fluctuate more than the price of bullion.
- Set a limit. Determine before you talk to a sales associate just how much money you can comfortably afford to spend on gold. Without fiscal parameters, you could easily spend more than you had intended.
- Know the market price for gold. There are websites that post daily gold prices and provide periodic price updates throughout the day. Some sites list gold prices in several currencies, including the Euro, Japanese Yen, Swiss Franc and the Indian Rupee. The better dealers will also include market research and analysis articles on their sites.
- A fair price will always reflect the current nominal value of gold. What is called "fair market value" will reflect the nominal value as well as the present supply of and demand for gold.
- Most gold bullion will have a small markup above the spot price (the instantaneous market price). A smaller purchase will entail a larger markup in terms of percentage compared to a larger purchase.
- Gold coins will be priced significantly further above spot price than will bullion. This is because coins tend to be more collectible and have a higher secondary-market demand. Expect to pay a premium for that. The rarer the coin, the higher the premium. However, for the most common of coins you may not encounter a premium. A good deal is defined as one that fits your budget.
Tips
- The better known online dealers also have a storefront or office that you can visit. This suggests they are not a fly-by-night operation but rather an established gold dealer.
Warning
- As with any investment product, the price of gold fluctuates—sometimes dramatically—so there is always a potential for loss. Spend only what you can afford to lose. Gold (or other precious metal) speculation can be financially dangerous, even for those who appear to know what they're doing.
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