You want to invest in gold, but you’ve never done it before and you don’t know the best way to get better returns. The good news is that gold is a safe bet. The price pattern is a pretty safe one at the moment, and now is probably a good time to get in. There are a few simple rules you need to follow if you’re going to maximize your returns.
Buy Close to Spot Gold Prices
Sometimes the secret to profiting from gold has less to do with finding the right price at which to sell, but finding the right price at which to buy. To maximize your returns, you will also have to minimize your costs.
For the average investor, paying premiums over spot is just a reality. It costs money to turn refined gold into coins and bars, store it, and insure it. But there are some costs you don’t have to pay, such as “numismatic” value, jewelers’ markup, or the rent and wages of a local shop. One easy way to save is going with a gold seller online who can offer lower premiums thanks to their own reduced operational expenses. Find out how to buy gold online and save money on your next big investment.
Avoid Fractional Gold Coins
One way you can wind up paying far above spot prices is by purchasing fractional coins. The cost per ounce of fractional coins is high compared to a 1 oz. gold coin or, even better, larger quantities.
Fractional coins and gram gold often appeal to new investors because they are more affordable individually, but you may want to consider silver if that’s the case, as silver coins are much more easily within reach of new and inexperienced investors.
Play the Long Game with Gold
You have to be either extremely lucky with your timing or know exactly what you’re doing to make a quick profit from gold. More often investors succeed by playing the long game.
There are a few reasons you should be patient with your first investment:
- The capital gains taxes you pay on investments are lower the longer you invest in something. You can always reduce your tax bill at sale by investing in assets that benefit from long-term planning.
- Gold has a long market cycle. Some believe in the commodities supercycle, a cycle that lasts several decades in which global demand for all commodities rises like a tide, pushing prices of everything from oil to precious metals up. Others simply note that gold price peaks tend to happen every few decades. Selling near a market peak can deliver better returns than equities can.
- Gold is a conservative asset that works counter to the stock market. When the stock market is unpredictable, precious metals prices tend to benefit. You can keep your wealth in gold during stock volatility or you can sell off your gains to buy equities cheap and enjoy a bigger position throughout the recovery.
Armed with these tips, you can enjoy better gold returns. The successful investor always has a plan.