First-timer's Guide To Investment-grade Gold

Investment-grade gold can be an excellent addition to a diversified portfolio for those investing in precious metals. For first-time buyers, understanding what investment-grade gold is and how to buy it are key steps before making your first purchase.

This article will provide an in-depth guide to investment-grade gold to help you make informed decisions as a beginning investor.

New to Investment-Grade Gold? What's It All About?

Investment-grade gold refers to physical gold bullion products that meet a certain purity standard for trading and investment purposes. Most investment-grade gold is .999 fine or greater, meaning it has a gold content of 99.9% or more.

The high level of purity provides more value compared to jewellery or decorative gold items that may have a lower gold content.

Common investment-grade gold products include:

Gold Bullion Bars - Rectangular bars sold in various sizes from 1 gram up to 400 ounces. Central banks and institutions may hold larger sizes.

Gold Bullion Coins - Coins like the American Gold Eagle, Canadian Maple Leaf, and South African Krugerrand contain one ounce of gold or less.

Gold Rounds - Circular discs stamped with designs and serial numbers. Similar to coins but not considered official legal tender.

Gold Wafers - Ultra-thin gold pieces often sealed in protective acrylic cases. Provides investors with smaller denominations.

Gold Granules - Small grain-like pieces of pure gold used to invest in physical gold.

The notable feature of these products is that they provide direct exposure to the value of gold in an investment portfolio. This differs from collectable, numismatic, or proof coins, which carry higher premiums for rarity or aesthetic appeal versus gold content.

Take a look at this article: 6 Notable Coins With Their Numismatic Value

Getting Started with Your First Gold Purchase

For many investors, building a position in physical gold starts small and grows over time. When making your first purchase of investment-grade gold, following some tips can help ensure it's a positive experience:

1. Start with a Small Purchase

Beginners are often advised to make an initial purchase of 1/4 to 1 ounce of gold. This could be a single coin, such as a 1/4 ounce American Gold Eagle, or a few smaller fractional coins, like 1/10 ounce Gold Eagles.

A small purchase lets you become comfortable with buying, holding, and eventually selling bullion without overextending your budget.

2. Compare Pricing Online Before Buying Locally

Before walking into a local dealer, get a sense of reasonable premiums by comparing online prices for the specific products you're interested in.

Most local coin shops price competitively, but knowing where fair market value lies will make you a savvier buyer and help avoid excessive markups. Dealers also appreciate working with educated customers.

3. Talk to Experts at Local Coin Shops

Reputable local coin dealers can answer questions unique to your area, like sales tax laws, and help you navigate choices like which bullion products they see as most liquid. Their expertise and personal service often offset slightly higher premiums versus online purchases.

4. Have a Plan for Secure Storage

Physical gold carries a responsibility. Before taking possession, know where to store it safely out of sight. Options range from home safes to safe deposit boxes to secure storage accounts through trusted providers. Your dealer can explain the pros and cons.

5. Stick with Well-Known Coins and Bars

While exotic gold items are exciting, it's wise to keep your first purchase to mainstream bullion coins and bars from recognized mints like the U.S. Mint, Royal Canadian Mint, or PAMP. Their widespread acceptance makes them easy to buy and sell.

This article may pique your interest: What Are Proof Coins, And Why Are They Valuable?

6. Separate Investing from Collecting

If you also collect rare coins, be careful not to blur the lines between physical gold as a bullion investment and numismatic collecting, which involves extra risks. Adhere to a disciplined bullion-focused strategy initially.

7. Every Ounce Counts

You don't need to buy a whole ounce to begin developing your gold portfolio. Even a 1/10-ounce coin provides an introduction to buying, holding, and selling for investors looking to get their feet wet with a minimal purchase. Let this experience guide your future buying as you build your precious metals allocation over time.

Following these tips can lead to a smooth first gold purchase that lays the right foundation for your wealth preservation strategy. Once you're comfortable with the basics, consider expanding your bullion holdings per your investment goals and risk tolerance.

Another Way to Invest in Gold - CFDs Trading

In addition to buying physical gold, CFD trading is another way to invest in gold. CFD stands for "contract for difference," allowing you to speculate on gold prices without owning the physical metal. Here's a quick overview of how gold CFDs work:

• You open a CFD position with a broker based on whether you think gold prices will rise (go long) or fall (go short).
• Your profit or loss is based on the difference between the gold price when you close the contract versus when you open it.
• CFDs provide exposure to gold price movements without storage and security needs.
• Traders use CFDs to hedge physical gold positions or speculate on gold volatility.
• Risks include leverage amplifying losses if prices move against you. Stop losses are essential.

For first-time gold investors interested in trading, gold CFDs offer an alternative to direct physical ownership with different benefits and risks to evaluate.

Wrapping Up

Investment-grade gold provides a way to diversify and protect wealth through turbulent times. Now that you understand the gold products available, how to buy from reputable sources, proper storage, and liquidation options, you can feel confident making your first gold investment.

Staying up to date on the latest gold news and trends will further your knowledge as you grow your holdings. With patience and prudent buying, gold can offer lasting value for your portfolio.

Discover the benefits of trading with markets.com.

“When considering “CFDs” for trading and price predictions, remember that trading CFDs involves a significant risk and could result in capital loss. Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be considered investment advice.”