4 Steps to Follow When You Purchase Gold for Investment Purposes

Want to purchase gold? Are you thinking that you will have to invest a lot of money for it? Well, if yes, then are you aware about the several advantages that gold investment will give you in return? It isn’t so easy to invest in gold in this competitive market.
However, if you still want to have a secured future, then gold investment is a great option. If you can purchase gold in the form of coins or bars, then you’ll be able to make huge profit with it in the future when the price of gold will increase.

How Can You Purchase Gold?

Just like savings is important for a secured future, similarly it is equally important that you purchase gold and make a good investment. Read on to know how you can buy gold for investment.

1) Set up an account with stock broker

So, you’re thinking of buy gold? If yes, then you will have to set up an account with a stock broker. There are several stock brokers online such as Gainesville Coins so you should gather sufficient information about them before you decide to choose one for your gold investments. You need to know that gold exchange traded funds offer a less-expense route when you invest in gold.

2) Figure out the number of gold exchange traded fund shares

You will have to figure out the number of gold exchange traded fund shares that you want to buy. You need to divide the investment by the present price of the shares of the fund you’ve chosen. ETF shares are generally purchased in complete shares. As such, you may round off the fraction of your calculation.

3) Evaluate the present prices of gold ETFs

Planning to purchase gold? Make sure you evaluate the recent prices of gold exchange traded funds that are the owner of gold. You can use the symbols of stock like GLD, ETFs and SGOL that have share prices near about one-tenth the price of a speck of gold. Also, you need to know that PHYS and IAU are usually priced at about 1/100th the price of an ounce.

4) Buy gold ETF shares by means of trade screen

You may use trade screen for buying gold exchange traded fund shares with the help of your brokerage account. You need to know that exchange traded fund shares are bought in the same way just like the stock shares. Decide the number of shares you’re willing to purchase and make use of the market order to get them at the present market price.

So, if you are also considering buying gold for investment purposes, make sure you follow the steps discussed above. This way, your gold investment will be beneficial in the long run.

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The 3 Types of Gold Buyers

Throughout the centuries, gold has been an important medium of exchange, store of value and in many cases, an attractive accessory. Yet, when it comes to investing, gold is a commodity like any other; it is volatile, subject to the rules of supply and demand, and it can return huge gains if bought at the right time.

There are many different types of buyers in the gold market, just as there are in stocks and other commodities.

Speculators

As I said before, gold is a relatively volatile commodity, which is no bad thing since volatility is what creates price movement and allows us to profit from our investments.

Speculators, however, do not buy gold with the intention of holding it as an investment for long periods. More likely, speculators, such as hedge fund traders or day traders, seek to buy gold for just a short amount of time, riding the recent trend until they get a signal to close their positions. They will also happily short gold if their methods suggest money can be made by selling the metal.

 But there are others who get caught up in the speculation too, the innocent public. All too often, the average person on the street will hear about the gold price ramping up, maybe reading in the paper about how traders are making huge sums of money in the gold market and they will get involved in buying gold too.

 The problem is, by the time the average person on the street ask themselves whether they should buy gold now it is nearly always too late.  News reports generally come too late for the general public and inexperienced investors nearly always lose their shirts when trying to time the markets.

Hedgers

Unlike speculators, hedgers have legitimate reasons for buying and selling gold since their business is often dependent on the price of the metal. Hedgers such as gold miners, gold service companies and financial institutions need to balance their exposure so will buy and sell gold futures to do so.

Interestingly, hedgers often catch market bottoms and top much better than speculators and data from the Commodity Futures Trading Commission (CFTC)can be used to analyze this relationship.

Investors

For the average investor, the preferred way to buy gold is as along-term holding. My analysis suggests that gold provides not only a viable alternative to other asset classes, but it is a commodity that can give decent returns, more than stocks in the right environments.

The ability to time the market is likely to improve returns and investors should refrain from following the crowd, particularly when speculators are bidding the price up.

In this way, the best time to buy gold occurs when any of the following conditions line-up:

  • When inflation is expected to rise sharply
  • When the gold price is at historical inflation-adjusted lows
  • When financial or national crisis may be imminent

When the price of gold is below its cost of production (supply and demand)