Almost since the beginning of time, gold has been the currency of choice in world economic systems. Envied, fought over, sought after and yes, even killed over by countless of thousands over the centuries. It even was subject of a famous movie entitled, “Goldfinger”. Today, once again, gold and going back to the gold standard is rearing it’s head on world economies. For the first time, this currency of both kings and the elite, is being made available to the small investor. Small investor opportunities to buy gold and even begin their own financial portfolio are abundant.
However, before a small investor can acquire this treasure, he/she needs to know how best to access and buy gold. A small investor also needs to know the many different types of gold vehicles available. Also, best ways to buy gold and make it part of their own small, perhaps, but vitally important portfolio of investments.
But first, let us examine just what is an investment portfolio. For all practical purposes, a financial portfolio is a collection of diverse investments making up the financial assets of an individual.(1)
A portfolio may consist of savings accounts, stocks and/or bonds, mutual funds, CD’s, Treasury bills, T-notes, or T-bonds, corporate, municipal or U.S. savings bonds, gold ownership in either tangible asset or certificate form, railroad, oil and/or real estate holdings, etc. In essence, a portfolio is the sum collection one’s financial holdings.
Now then, let’s get back to how best a small investor can access and buy gold making it a part of their investment strategy and portfolio. Firstly, there are some preparations which need to be made by a small investor. And preparations to acquire and buy gold commodities begin with knowledge (accumulated know-how), first and wisdom (knowing what to do with the knowledge), following.
* A commodity is a good for which there is a demand, which often comes out of the earth and maintains a universal price.
* A small investor needs to research all the information one can about this precious yellow commodity. This is a must whenever making any type of investment. In today’s lightening fast Internet world, ignorance is no excuse. Take time to research carefully, but don’t take too much time as the price of gold is constantly changing.
* Determine how much one wants to budget every month and set it aside. Don’t let the price of gold deter you from the investment as there are ways today which we will discuss later for a small investor to easily acquire and buy gold and add it to their portfolio.
* Target the type of gold wanted: bullion, coins, gold mine investment, jewelry, mutual fund, etc. Then research it carefully before buying gold and adding it to your portfolio. Of course, knowing when to buy gold and when to sell is another element which is primordial.
* Roll out or roll over an expiring stock, bond or CD and purchase more gold. The standard advice is to have a 20% portfolio ratio in gold, but there is no golden rule. (2)
Now that one has followed through on the preparatory phase of investing in gold, let’s examine the many types of gold investments there are. An investor should become familiar with them and then target one’s preferred choice.
There can be tangible gold: (tangible being that which can be touched) and this may include gold bouillon bars and coins and a third form to be discussed in a little bit.
There is also paper gold: certificates; precious metal mutual funds; stock options in gold mining; and gold and metals futures.
Another way to buy gold is the most common way and one in which most everyone has invested in one form or another over the centuries – jewelery. This can come in the form of an old tie clasp, cuff link, gold tooth, baby chain, wedding band or class ring. Whatever is pure gold has value, which in turn, brings us to the next important point.
One also needs to determine the integrity of the gold specimen. Is it pure gold, mixed, or even gold-plated? If it is mixed, then what percentage of purity does it have?
Also, another factor which needs to be determined is the numismatics market itself, as the design and condition of a coin can affect its price as much as the gold content itself. Numismatics is the study or collection of currency, including coins, tokens, paper money, and related objects.
Then, another factor to considered is how will a small investor store the gold? In a safe deposit box at a bank or at home. Should they keep gold in the safes of Switzerland or determine if they’d rather have gold in paper certificates, mutual funds, or gold mining stocks which are less profitable and less diversified. The options are many.(3)
This, in essence, is only an overview of the many ways for a small investor to invest in gold, the most precious commodity in the history of the world. Today, a great many more people than ever before buy gold. It is accessible to a small investor with far less to invest than ever before. It was once only the currency of kings but now it has also become the currency of many of the common man.
Written By Beverly Anne Sanchez,