Insiders’ Guide To Gold Investing
Hi, my name’s Doug and I created this site to share with you a lot of what I’ve learnt, the experience I’ve gained and the contacts I’ve made since I first started investing in gold back in 2003.
I hope this will help you accelerate through the learning curve of this amazing investment opportunity.
If you want to fast track and get started right away then I invite you to play this message I’ve made for you
I have tried to make this site a ‘one stop shop’ for potential gold investors and I hope I have covered all the information you might need. If not and you have any questions about investing in gold please feel free to contact me by clicking on the ‘About/Contact Me’ tab above.
I wish you every success.
Here is a list of the topics covered below. Click on the red arrows if you want to skip straight to a particular topic. If you want to read them all in sequence just keep scrolling down.
The Compelling Case For Gold >>>
The Biggest Mistake Most New Gold Investors Make… and How To Avoid It >>>
Buying Gold: How To Maximize Your Return On Investment and Minimize Your Risk >>>
HowTo Buy Gold Even If You Have No Money To Invest >>>
Gold IRAs: How To Leverage Gold To Protect and Inflation Proof Your Retirement >>>
Where To Buy Gold >>>
Getting Started >>>
The Compelling Case For Gold
Are you aware that gold has gone up in value for each of the past 12 years and that its value has increased six fold since 2002?
Would it surprise you to learn that governments, super wealthy individuals and savvy investors all round the world are investing in gold at an unprecedented rate right now?
And do you think it’s a coincidence that all this is happening when previously unthinkable events are unfolding worldwide?
Who would have thought that the US would ever lose its coveted AAA credit rating, or that entire countries, let alone their banking systems, would fail or that a powerhouse international currency such as the Euro would be on its knees?
Well that’s the world we are living in today, and that’s why governments and the super rich are running to the safe haven of gold to preserve and protect their wealth.
The Bad News
The Eurozone crisis might be grabbing the headlines but that might well suit the American Government as it’s taking the spotlight off the frailties of our own economy.
It is a fact that the value of the US Dollar is on the decline (it’s actually worth 97% less than it once was) and that is hardly about to change since our National Debt is spinning out of control. Here’s why that’s happening…
Until 1971 every dollar in circulation was backed up by its equivalent value in gold in the Government reserves. That was known as the ‘Gold Standard’ which President Nixon then disbanded and the dollar became known as a fiat currency.
That was the point when the government starting printing money to cover its expenditure and ever since they’ve been printing more and more. In recent years as the economic situation has deteriorated they’ve been doing so at an alarming rate. They’ve adopted this Quantitative Easing strategy supposedly to help the economy but the reality is that all they’re doing is papering over the cracks in the short term and pushing the problem of their debts further down the road.
They can do that now that they no longer need to have a dollar’s worth of gold for every dollar bill they print. So it’s like they are paying for things with a credit card then simply printing paper currency and using that to pay the credit card bills. Needless to say that can’t go on indefinitely.
Paper currencies have no ‘real’ value. They are IOU’s which people trust to be worth their face values. That’s all very well all the time that the trust is sound and unquestioned.
Back in 1971 our National Debt was $414 billion. Today it’s over $16 trillion, so that’s a staggering 3816% increase! What’s more it’s increasing at an average of $3.9 billion per day or $42,000 per second. That’s hard to comprehend isn’t it!
What most US citizens are unaware of is that our individual share of this is just over $50,000 per head.
Why does this matter? Because the higher the National Debt the higher taxes eventually have to go, cuts in benefits and programs become inevitable, interest rates eventually have to rise and all this results in… an even weaker dollar.
This in turn makes America a weaker nation. What it’s effectively doing is spending money it doesn’t have, stealing from the future and stunting growth.
I could go on painting the picture blacker and blacker… I could give you proof that every fiat currency in history has failed and that the average life of a fiat currency is 40 years. And in case you’re already ahead of me you could be working out that 1971 was 41 years ago. Hmmm….
Don’t just take my word for it though! In the video on the right James Turk, Director of the GoldMoney Foundation gives further explanation why everyone should be investing in gold to protect themselves against the tough times ahead.
The Good News
Now I want to give you the good news…. and let you know that it’s not too late to do something about it so that you won’t have to be one of the many who will suffer financially when the inevitable happens. Provided you act quickly now you can protect your financial future and that of your loved ones too.
The governments (particularly China, India and Russia) and super wealthy investors that I referred to earlier have already seen the writing on the wall and are investing in gold to preserve their wealth and protect their futures. YOU can too.
Yes, that’s correct, investing in gold is not a luxury restricted to a privileged few. It’s not a luxury afforded only to the rich and famous. Everyday folks just like you and me can and should be buying gold too.
And further good news is that it’s actually not that difficult to do when you know how. Read on and I’ll give you all the information you need.
Good question! Most financial advisors and experts are recommending nowadays that you include gold in your investment portfolio to protect or ‘hedge’ it. The actual percentage they recommend varies from one advisor to another but the range is mostly between 10 and 30%. Some even recommend as much as 50% though.
Here’s some of the reasons why investing in gold makes sense…
- Gold is universally recognised as a financial safe haven because it has what is technically referred to as a ‘negative correlation’ with traditional forms of investment such as bonds, stocks and Treasury Bills and with the value of the US dollar. When these fall in value so the value of gold rises. It always has.
- As economic volatility increases, the more gold goes up in value. So in today’s turbulent economic climate the value of gold will most likely go up and up. Naturally the price of gold will be subject to short term fluctuations but the overall trend will be up all the time the economy is struggling. This is why investing in gold for long term growth makes much more sense than doing so for short term profit.
- Gold also acts as a hedge against inflation. As inflation goes up, so does the value of gold. So when you own gold you are actually protecting your buying power.
- Gold is a rare commodity, but not too rare. It’s actually the relative rarity of any asset that gives it its value. If it was easy to mine or produce gold its value would diminish because there would then be plentiful supply of it. It can’t be manufactured at will in the same way that paper money can be.
- Gold has intrinsic value. This means that it has always been perceived to be of value and because of that there will always be a demand for it. For want of a better term, it will always be desired because of its ‘goldness’.
- Gold is durable. It won’t rust, tarnish or erode. This means that it doesn’t have a short shelf life so you can hold onto it indefinitely with no risk that it will lose value just because it’s getting older.
- Gold is one of the most liquid assets around. You can use gold coins as a form of currency or for bartering. Wherever you happen to be its value will always be the same. You can always sell gold very quickly should your need arise.
Given all these factors, it’s not difficult to understand why those governments and super wealthy investors I’ve referred to a couple of times above are investing in gold like crazy right now.
Click on the following link if you’d like to skip straight to the Section about Where To Buy Gold
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The Biggest Mistake Most New Gold Investors Make… and How To Avoid It
Then they make the mistake of not doing enough research. Often their research extends no further than asking their accountant or financial advisor how to ‘get exposed to gold’. And very often the advice they are given is to invest in the gold ETF, GLD.
Novice investors who rely on such advice without looking further into it are likely to be under the mistaken impression that this way they are adding real physical gold to their portfolio. What they don’t realize though, because they have not done their homework, is that this is not so. Nor are they aware that GLD carries with it a lot of counterparty risk or that GLD does not offer a lot of the wealth protection benefits that physical gold does. Let me explain more, starting with the basics….
What is an ETF?
An ETF is an investment fund (exchange traded fund) that is traded on stock exchanges in the same way that stocks and shares are. It holds assets such as commodities, bonds and stocks and in most cases tracks an index.
What is a Gold ETF?
A Gold ETF is a commodity exchange traded fund and the commodity or principal asset that it consists of naturally is gold.
An important distinction here is that when you buy a gold ETF you do not actually own any physical gold because the fund is made up of gold contracts and derivatives that are merely backed by gold. So even when you choose to redeem your ETF you receive the equivalent in cash rather than the metal itself.
When you own a gold ETF the ‘exposure to gold’ you are getting is actually exposure to gold’s performance. You are not investing in gold ‘physically’. Since the fund’s assets are supported by gold the ETF is tracking and reflecting that performance.
What is the GLD ETF?
In 2004 the SPDR Gold Trust exchange traded fund was launched, with the ticker symbol GLD. Today it trades around 12m shares per day and in theory its share price represents one tenth of an ounce of bullion whereas in reality it tends to lag behind it by around $50 per ounce.
The purpose of its creation was to offer a cheaper way of investing in gold.
Is GLD As Good As Gold?
Another way of asking that question would be ‘Is GLD as SAFE as Gold? Owning GLD carries with it far more risk than owning the physical metal itself. That being the case you may well be wondering why financial advisors recommend it.
The simple answer is that those in the financial industry, bankers included of course, do not want you investing in gold ‘physically’ because in doing so you would be reducing the liquidity of the ‘system’. They have a vested interest in keeping the system as liquid as possible. So they advocate investing in gold stocks rather than investing in gold bullion. I’ve already mentioned previously how trillions of dollars of printed paper money have been injected into the otherwise insolvent banking system to keep it afloat.
Owning GLD carries with it a lot of inherent risk. What you are effectively doing is hedging a paper based portfolio with another paper based asset. When you buy GLD you are getting a promissory note, a promise that when you ask for it you will be given something that represents money.
When you own the actual metal itself you already own the money. Do you agree that it is better to have the money in your hand than a piece of paper promising to pay you the money when you ask for it? Not just any piece of paper by the way, but a piece of paper with all sorts of conditions and clauses written on it to protect the other party, not you! More on counterparty risk later…
You can look at it another way by taking the example of the COMEX. This makes paper trades of gold which represent in total a lot more than the amount of gold that is actually available. Should the COMEX default, GLD would be falling as fast as the price of gold was rising! In that scenario would you rather own GLD or physical gold?!
You may be thinking that the COMEX defaulting is a Doomsday scenario and of course you are right. But isn’t one of the reasons for investing in gold to protect ourselves from Doomsday scenarios? And would most people a few years ago have considered Lehman Brothers failing, Greece going bankrupt or the Euro being on the brink of collapse no more than Doomsday scenarios?
GLD and Counterparty Risk
Most investors who buy GLD never read the prospectus. How do I know that? Because if they did, they would never go ahead! The fine print is littered with counterparty risk. Counterparty risk has been defined as ‘The risk to each party of a contract that the counterparty will not live up to its contractual obligations’.
Believe me (or read the prospectus yourself if you don’t!), the fine print gives the ‘Trust’ all sorts of ways to wriggle out of its obligations should a situation arise where it needed to.
How To Avoid The Mistake
- Do your research and due diligence thoroughly. Don’t buy the GLD ETF without reading the prospectus and understanding the risks!
- Take the least risky option and buy physical gold instead! (Click here for my Recommended Source. This is the one I use all the time now simply because I’ve found them to be the best).
To get maximum benefit from the wealth protection umbrella that gold offers, buying physical gold is a much safer option. It offers a better hedge than ETFs and much less counterparty risk. Investing in gold physically is the wisest choice.
In the next section I will explain how to go about it…
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Buying Gold: How To Maximize Your Return On Investment and Minimize Your Risk
So what is the best way to invest in gold?
Having established that the least risky way of investing in gold for the inexperienced investor is to buy the actual metal itself, we will now explore how to make the maximum potential gain with the least possible risk.
How To Maximize Your Return On Investment (ROI)
To maximize your return on investment when investing in gold you need to be aware of what your options for buying physical gold are, and the best one of those to choose.
You can invest in two types of physical gold, namely:
- Gold Jewelry
- Gold Bullion
Gold jewelry might be the initial choice for some people, particularly the ladies, because of its beauty and intrinsic value. But you need to recognize that this will not give you the best ROI.
This is because the costs of design and making each piece of jewelry plus a ‘uniqueness factor’ are taken into account in the price when you buy it. When you come to sell it however you will normally find that the prevailing gold price is the main factor in determining its value and the initial design and fabrication costs will not be taken into account.
Gold jewelry is also not as liquid as gold bullion because the desire for it is based on personal tastes and preferences. The fact that you found it attractive does not necessarily mean that someone else will. This means that you might have to wait for the right buyer to come along, which would not be ideal if you wanted to sell it in a hurry. This is not so with bullion.
Gold bullion comes in two forms:
- Gold bullion bars
- Gold bullion coins
This might surprise you because many people assume gold bullion only to be the sort of ingots you would find in bank vaults such as Fort Knox. But gold coins are actually bullion too.
Gold bars come in different sizes. Some people buy the 10 oz bar but the 100 oz bar is more common. It is always better to own something that most people desire so the 100 oz bar is the safest bet. The problem with that is that a 100 oz bar is out of reach for most individual investors.
Gold coins come in different sizes too. The most common size traded is the 1 oz coin but they also come in sizes of ½, ¼, 1/10 or even 1/20 oz.
For private individuals investing in gold coins is preferable to investing in gold bars, the reason being that they are more liquid since they can be bought and sold in smaller amounts and denominations. A single bar can only be sold to one person whereas a variety of coins of the equal value to that bar could be sold to several different buyers.
Liquidity is particularly relevant when you want to sell quickly.
Further advantage of coins over bars are:
- they are more transportable i.e. easier to carry around
- as they come in smaller denominations it makes it easier to sell just a part of your investment if you so desire
So to summarize so far, investing in gold coins will most likely give you the best overall return on investment.
What Determines The Price of Gold Bullion?
Anything that carries a fineness mark of .999 or 1 oz fine is 99.9 percent pure and will be valued in accordance with the prevailing spot price of gold. As the standard is 99.9% it is recommended that you don’t buy gold marked in any different way to this.
The spot price is generally set by the COMEX which is based in New York City and is the largest commodity exchange in the world.
You will not be able to buy gold at the exact COMEX price because there will be dealing costs involved. You as a private investor cannot buy direct from the COMEX and instead when investing in gold you will have to go through an intermediary, commonly known as a dealer. The dealing cost is the fee that any dealer or seller will charge to cover their costs and this of course is how they make their profit.
You should expect to incur fees as that’s the way the market works and you shouldn’t view it as any sort of scam. The amount of mark up or fee that a dealer charges will depend on factors such as local demand and transaction size and will typically be anything up to 10%. Anyone charging more than that you should avoid.
How to Minimize Your Risk
Having established that gold coins are the wisest choice for the individual investor, to minimize your risk you need to know about the different types of gold coins you can invest in and the pros and cons of each.
There are two categories that you can consider, namely:
- Standard Gold Coins
- Rare (Numismatic) Gold Coins
Standard gold coins are those which are produced in government mints and whose governments then guarantee them, so they become recognized as legal tender. They are not thought of as collectible coins. Examples of such are the Eagle from America, the Maple Leaf from Canada, the Krugerrand from South Africa, the Panda from China and the Philharmonic from Austria.
All of these coins are standard apart from whatever symbol each country puts on its own coin to distinguish it. With the exception of the Krugerrand each one is made up of 1 oz of 99.9 percent pure gold. The Krugerrand contains in its mix a small quantity of copper to make it more resilient but this copper is an addition to the overall quantity rather than being included in it, meaning that the coin nevertheless contains 1 oz of pure gold.
Rare gold coins, also known as numismatic coins are either not being produced anymore or are being produced in much smaller quantities. This limits their supply thus they become rare and collectable items. Examples of some of these are the Liberty Head, the St Gaudens, the British Sovereign and the Swiss 20 Franc.
These numismatic, collectors’ coins have the added factor of beauty and as old, precious items their value is determined by 3 factors, namely the numismatic content, the metal content and the dealer profit.
Compare this with the standard bullion gold coins whose value is determined by the 2 factors of metal content and dealer profit.
The value of rare coins is enhanced in comparison to standard bullion coins but the standard gold bullion coins are the safest from of investment and carry least risk for the inexperienced investor. This is because there are a lot of fakes and forgeries of numismatic and semi numismatic coins in circulation.
If rare gold coins are your preference though you should not necessarily let that stop you because the risk can be mitigated by purchasing from a trustworthy, reliable and reputable source.
In fact where you buy your gold is the final, important piece of the jigsaw when it comes to minimizing your risk. Get that part wrong and you could easily turn your venture into investing in gold into a disaster. The Company that I use all the time now and who I’ve always found to be trustworthy and reliable is Regal Assets. They have an excellent reputation and I have no hesitation in recommending them.
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How To Buy Gold Even If You Have No Money To Invest
Maybe you would like to emulate the many smart investors who are seeing the writing on the wall and strategically investing in gold and silver (and other precious metals too) to preserve their wealth – but you don’t have the funds to do so?
Well there is a way that you can invest in gold without having to dig into your pocket!
There is a way forward for you providing you have an existing IRA or retirement account. The secret is to rollover or transfer some or all of that into a Gold IRA.
This will enable you to finance your purchase of physical gold utilising some of the funds that you already have locked away, and with no tax implications or penalties. Conversely there are actually tax benefits in investing in gold this way.
I will explain more about Gold IRAs and how to do this in the next section.
Gold IRAs: How To Leverage Gold To Protect and Inflation Proof Your Retirement
Do you have a retirement plan that is under performing? Is its value not showing the growth you were promised?
Are you concerned that it will be eroded by inflation as the current economic crisis deepens and the impact could be that you will struggle financially in your retirement?
If so you are not alone. Many people just like you feel they should be doing something to prop up and safeguard their retirement fund before it’s too late but are not sure what to do.
The answer is to include gold in your retirement account as it will make a massive difference to the quality of your life financially in your twilight years.
I have already explained in an earlier Section how investing in gold can protect your wealth and why most financial experts recommend nowadays that you make gold an important part of your investment portfolio.
I’ve also recommended some precise steps to take. Now I’d like to recommend some precise steps to take specifically related to your retirement fund.
What I’m referring to is setting up a Gold IRA. It amazes me that so many people are unaware that you are allowed to include physical gold (and other precious metals too) in your retirement plan.
It’s actually a very simple and straightforward procedure when you know how. It’s equally straightforward to transfer or rollover some or all of your existing IRA or IRAs into a Gold IRA. And once you’ve done so you can sit back safe in the knowledge that you’ve hedged your retirement portfolio and given yourself the best possible chance of a retirement free from financial stress and worries. You can’t put a price on that.
I personally believe that setting up a Gold IRA is one of the most beneficial aspects of investing in gold. Including gold (or silver) in your retirement portfolio can reduce volatility and help make the safety and profitability of it much more achievable. Gold IRA’s also enable you to invest in gold in a very tax effective way.
In fact I attach so much importance to this topic that I have created an extensive (free) Gold IRA Report which you can access from the navigation bar at the top of this page or from the link below. Rest assured that you will not have to provide your email address to access it and you will not be put on a mailing list.
I decided to create a separate report rather than include all the information on this page as that way I’ve been able to treat it as a topic in its own right which I believe it merits. In it I also include a breakdown step by step of how I set my own Gold IRA up so that you can copy what I did if you so choose.
For ease of convenience I’ve also created a link directly to the report here: Gold IRA Report.
Please spread the word about how to invest in gold through your retirement plan!
Where To Buy Gold
I have given you tips in an earlier section on how to minimize your risk when buying physical gold. For them to be effective they have to be combined with one other vital factor, which is to only buy from a trusted, reliable and reputable source.
In order to do so you need to do your research thoroughly or follow a recommendation from others who have had a positive experience.
Research is much easier these days because of the internet. You’ve already discovered that or you wouldn’t be reading this! The internet also offers you an easy way of investing in gold from the comfort of your own home.
Tips For Choosing a Gold Vendor or Dealer
- Only buy from a vendor who can provide you with a certificate of weight and purity and avoid any who are unable to do so. This is for your protection to ensure that the gold you buy is authentic and also because you will need to provide this to a buyer when you eventually come to sell.
- Only buy from a Company that has a good reputation and has been in business for a number of years.
- Be wary of anyone who cold calls you and tries to lure you into investing in gold for the first time with all sorts and offers and ‘special deals’.
- Choose a vendor who is accredited by some sort of trade association or consumer protection organization such as the Better Business Bureau (BBB). This is because they will have had to be vetted by the organization before being accredited and it demonstrates that the particular vendor is showing transparency. In the case of the BBB the vendor has to disclose publically full details of any previous customer disputes and they will be rated by the BBB accordingly.
- Choose a vendor with a good track record for customer service
- If you are considering a Gold IRA choose a vendor who specializes in retirement funds as well as precious metals
- Even if you choose to buy online choose a vendor with an offline presence who you can talk to over the ‘phone and who will support you throughout the buying process
Who I Recommend and Why
For some time now I have been using just one Company for all my gold and precious metals transactions simply because I have found them to be the best around. They are called Regal Assets. This is the Company that I used for setting up my Gold IRA too.
They meet all the important criteria that I referred to above, including having an A+ rating with the BBB which is the top level they award.
Click on this green Play button to watch a video review I’ve made explaining the main reasons why I am happy to recommend them.
They have a first class reputation for Customer Service which I can certainly vouch for. I know I’m not alone in finding their service exceptional – you can check out what some of their other customers have said about them here: Regal Assets Customer Comments.
Before I first started investing in gold I did a lot of research into many different vendors and probably requested more than 20 gold investing kits! Without doubt the most informative one I received was from Regal Assets.
Because of the close working relationship that I have built up with them, for all of my website visitors who request one of their free Gold Investing Kits they will also include in the package a free signed copy of David Wiedemer’s best selling book ‘Aftershock – Protect Yourself and Profit in the Next Global Meltdown’ which is currently on sale at Amazon for $16. That book is well worth reading in my opinion, irrespective of your investing preferences.
I recommend that you request one of these special Gold Investors’ Packages yourself by either putting your name, email and phone number in the form at the foot of this page or by giving Regal a call on their Toll Free number 1-877-425-4316.
It’s completely free and they will even pay the shipping!
If you use the form please make sure you include the best phone number that you can be reached on because you’ll get a call from Regal Assets within 24 hours to confirm your address. Your package, which will include everything you need to get started, will then arrive within a week.
The person who calls you will be extremely knowledgeable about investing in gold and other precious metals so I recommend that you jot down any questions that you might have in readiness for their call.
I remember that I learnt more from that initial conversation and from the questions I asked than I had from all the research I had done previously!
Here’s the form. Fill it in now and I’m sure that at some point in the future you’ll be really glad you had the foresight to grab this opportunity to preserve your wealth before it’s too late!
Please share this information with anyone else who you think may be interested in gold investing