There are several main ways of putting your cash into gold. You can try ETFs or Exchange-Traded Funds; there are gold shares; and then there's the option of purchasing the gold yourself in the form of bullion. Bullion is by far the perfect choice for the beginner.
Bullion exists in two general types: ingots and coinage. I recommend you start off by buying gold coins. They are simpler to buy and easier to sell than gold bars. Plus, coins give you far greater flexibility when it comes to disposing of your gold. For example, if you wanted to sell a quarter of your gold holdings, it's obviously easier if you own twelve coins rather than one or two gold bars.
Do not spend a cent before you find the very best price you can. Bullion traders earn their profit from what is technically called "the spread". The Spread is the profit they make when they buy for less than the market price and sell off for a higher price. This varies but usually depends on the quantity of gold, and the grade of gold for sale. It might also depend on who the seller is.
Stay away from those gold vending machines. They have become common in malls and shopping centers all over the world and are aimed at investors who do not know what they are doing. No seasoned dealer would ever think of sourcing from a vending machine, and you shouldn't either.
Buying gold medals and coins is your best starting point. Coins made from gold can be separated into two main types: bullion and numismatic coinage. Bullion coins are very often minted only for people who want to invest, but numismatic coins were made as currency and usually have additional value in addition to their metal composition. How much bullion coins are worth is based on how much gold they contain plus a small margin of something like 5 percent to eight percent. This difference is generally referred to the "premium price". Typical investment gold coins include the British sovereign, American Eagle, Canadian Gold Maple Leaf, Austrian Philharmoniker and British Britannia.
Commemorative coins are usually sold on the indication that their value will rise over time. Sadly, this is usually not the outcome. The mint's original selling price for commemorative coins is nearly always significantly higher than the gold content. Commemorating events like Hitler's Birthday or The Centenary of Jimmy Raison's Hanging does not often add any value to the coin itself. This is the reason almost all experts warn against buying commemorative coins.
I would often tell novices to deal exclusively in bullion coins and look for those offering the smallest premium over the quoted gold price. The one ounce Krugerrand from South Africa is the most used bullion coin in the world and usually trades at the least premium over the gold spot price.
Hong Kong is the cheapest location for buying gold. The Central Area of Hong Kong around Queen's Road has plenty of banks offering bullion coins at amounts as little as 0.2% over the premium price. Of course, transport costs can add a lot to the price. But if you intend to go anyway, then why not make the most of it?
by Peter Preston
Being aware of the best place to buy gold can save you a lot of money. Aside from buying gold bullion, there are other ways to make money, including buy and selling scrap silver.
