Due to the increase of infected people with COVID-19, we have all seen the current financial chaos happening around the world. In times of crisis (like the 2008 crash) many investors are likely to buy gold as it is the ultimate safe haven. Governments right now are simply printing more money in an attempt to rectify the chaos, yet as a result are decreasing the value of their currency. Gold is recognised world-wide and as there is a limited supply, the value increases when the demand is high thus making it a safe-haven. There are of course many ways to buy gold bullion, but you, alongside many other people are wondering: what is the best way to buy Gold?
The $US is currently gaining strength as a “safe haven”. However, if things deteriorate there, and especially if Trump decides to tell everybody to go back to work in the next few weeks, there is likely to be a rush to the precious metal.
One of the ways to buy Gold is via a Forex trade with your broker BUT it is not something I would recommend. This is due to a number of reasons that we actually saw in the last few days which I explained in yesterday’s blog post:
Why I Wouldn’t Recommend Buying Gold via a Forex Trade with your Broker
- The spreads (the difference between buy and sell price) widened considerably, so you lose out when entering and exiting a trade.
- There is a daily swap interest charge deducted from your account for holding gold in a long position. One of our Forex Mentor Pro members David explained yesterday in the live session that his broker had “frozen” his trade. I am sure that did not end well for him!
- Buying the physical metal from retail shops can be fraught with danger as you may be swindled by unscrupulous vendors, in that the gold or silver may not be as pure as claimed.
When you try to sell to many of these type of outlets that is often the first thing they try to use to offer inexperienced sellers a lower price, so beware!
Taking Control of Physical Metal Has Other Problems.
- Retailers usually have higher markups than an exchange
- Sales tax has to be paid on most transactions (in many countries, it does not if it stays in a vault).
- Precious metals are bulky, expensive to mail & insure
- Requires higher home insurance premiums
- Requires a safe
- Requires secrecy from family & friends
- May require testing before selling & a retail buyer will give you less than its worth
There are alternatives.
You may choose to buy coins which is a subject I will cover in a separate article. Once again you need to do your research before going down this route.
Some coins are “marked up” a significant amount due to their aesthetic value, you should only buy those where the value is in the metal.
Personally I prefer a mixture of both.
If the world money system does collapse as the doom and gloom merchants would have us believe, then it will be difficult to buy a loaf of bread with a bar of gold. On the other hand, if you intend to buy a lot of gold, coins can be extremely bulky.
Why I Wouldn’t Recommend Buying Gold Via a Bank
Be ultra-careful buying gold via a bank. They often charge a huge markup & usually the gold is not allocated to an individual and in the event of a bank going bust it could be very difficult for you to get your money back.
Another thing to bear in mind is that the US government forced citizens to sell their gold back to the Federal Reserve during the great depression. The threat of a $10.000 fine or even jail, however, failed to persuade everyone to do so. Many people who had theirs hidden under the bed, took the risk and avoided being screwed by the government.
After the Federal Reserve took possession at the forced sales price of $20.67 per troy ounce, they subsequently raised the price to $35 giving themselves a huge profit in the process. Banks and governments are in each other’s pockets and therefore I for one will not have my gold stored with them. There is a school of thought now amongst many experienced investors that it is better to have your bullion stored in a secure vault in a different country, thereby making it even harder for your government to get their hands on it.
So What is the Best Way to Buy Gold?
The traditional method of buying bullion was via a licensed broker and there are now 1000’s of retail outlets that buy & sell gold and silver. However, there are a number of advantages to buying and storing precious metals online. I started doing so over 10 years ago and settled on buying and selling via this company: bullionvault.com. Prior to this kind of online “exchange” it was not cost-effective for small investors to buy bullion as the dealers charged too high a premium (spread) between the buying and selling price.
It was not possible to buy allocated “part” bars. With BullionVault you can buy a gram at a time up to a tonne! They hold over $2 billion worth of gold on behalf of private clients – the largest stock of privately-held bullion in the world.
They state that it’s the easiest (it is), cheapest (it is), safest (judge for yourself) way to buy and sell gold, in the world (see the video below). You can buy or sell gold, silver and platinum on a daily basis via their online platform.
Check out the video to see who they are and how it works and the security measures that are in place to protect your investment.
You can also see current live prices and amounts available to buy & how it works on their dashboard here: http://www.bullionvault.com
Another Good Site
If you are in the USA, this is another good site: https://goldsilver.com/
It is owned and run by Mike Maloney, who is Robert Kiyosaki’s gold guy. There is a lot of educational material on their website and especially on their YouTube channel: Mike Maloney Youtube
As ever, I need to remind you that I am not a financial adviser. This is not investment advice, I simply show you what I do and my reasoning for doing so. You need to do your own research and due diligence before investing in anything.
Also, do not be tempted to buy silver at the moment. It is the most rigged market in the world AND you get a lot more for the money but that in turn causes higher storage and transport costs.
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