Investing in Physical Gold: What You Need to Know

Investing in physical gold is a great way to diversify your portfolio and protect yourself against inflation. Gold has been a reliable store of value for centuries, and it can be purchased in the form of jewelry, ingots, coins, and rounds. When buying physical gold, you should be aware of the spot price, additional costs, and storage options. You can also invest in gold indirectly through exchange-traded funds (ETFs) or gold mutual funds.

These investments offer more liquidity than physical gold but come with certain legal protections and management fees. No, there are no restrictions on private ownership of gold in the United States. You are only limited by your budget and your common sense. Louis Palafoutas, a Morgan Gold gold bullion dealer who has been in the gold industry for three decades, says that while some buyers choose to store gold in a safe at home, others ask to open accounts at Brink's or Delaware Depository, where the Comex and the Internal Revenue Service keep their gold.

For example, gold bullion coins, such as the American Eagles, which are guaranteed by the federal government, have inherent liquidity because they are undeniably bought and sold by coin dealers, banks and commercial traders. When considering storing gold in a deposit, investors should always ask if their investment is kept on or off the parent company's balance sheet. It is also important to ensure that their metals are in an account or sub-account titled in their name so that it is clear who owns what in the event of a company not complying with their records. Turks says that a clear advantage of using professional storage are independent third-party audits, which confirm essential details and have unlimited access to the Internet.

Clark also points out that investors can receive their gold at any time. The precious metal can be delivered in an armored vehicle or shipped overnight. In addition, Clark says, gold can be deposited as security to receive a loan, which avoids the tax consequences of selling the commodity.Multiredundant security systems also make custodians an extremely safe option. Investing in gold mutual funds means that you own shares in several gold-related assets, such as many companies that mine or process gold, but you don't own real gold or individual stocks.

Exchange-traded funds or gold mutual funds are more liquid than holding physical gold and offer a level of diversification that is not offered by a single stock.ETFs and mutual funds also come with certain legal protections. Please note that some funds will have management fees. Learn more about ETFs and mutual funds. You can buy physical gold at retailers such as JM Bullion and APMEX, as well as at pawn and jewelry houses.Bullion is physical gold of high purity, usually in the form of ingots, bars, coins or rounds (which are often confused with coins due to their circular shape but are closer to gold bars because they have no legal tender and do not differ from year to year).

Buying physical gold has drawbacks such as price margins on the part of sellers and the need for storage which is why financial advisors usually recommend investing in gold indirectly through securities such as gold funds and stocks.The problem with that depending on the reason you buy your gold is that you cannot take physical possession of it (or rather you can but it will cost you dearly) and you must have the utmost confidence that whoever has your gold holds it securely.While you probably want to buy ETFs that actually hold physical gold there are funds that invest in companies in the gold industry often gold mining stocks or gold streaming companies that provide funding to gold miners.Gold futures are more liquid than physical gold and have no management fees although brokerage firms may charge a trading fee (also called a commission) per contract.This helps investors seeking the safety of gold and protection against inflation to benefit from an investment in gold with more liquidity than a physical investment in gold.There are many ways to invest in gold from exchange-traded funds (ETFs) to gold stocks but the easiest way is to simply buy physical gold or ingots directly.

Toni Chinault
Toni Chinault

Friendly twitter maven. Amateur bacon enthusiast. Certified music practitioner. Music practitioner. Avid web maven. Avid travel evangelist.