Gold is one of the most ancient forms of currency, that predates our usual paper bills and plastic cards. It is considered to be one of the most precious metals in the world for centuries, and this rings true until today. Therefore, it’s not surprising that the perception towards this fine metal is still great and is one of the most popular investments across the globe.
So if you’re one of those traditional guys who’d rather not get their hands dirty with cryptocurrencies like Bitcoin, read on to understand just how much you need to know when buying gold online. I guarantee you that it’s certainly worth your while and one of the best investments you’ll ever make.
Here are 6 Important Things To Know When Buying Gold Online:
1. Purity of Gold
Whether you’re looking to buy gold jewelry, coins, or even bullion, the first main consideration you need to check is its purity. This is done through checking for gold hallmarks or actual marks on the gold itself which shows its purity and the goldsmith who made the specific piece.
Hallmarking is essentially one of the oldest ways of consumer protection that dates back to the time of King Louis IX in the 1200s. These days, what you need to find out is a piece of gold’s purity on the basis of karats and fineness. The higher the karat and fineness mean the purer your gold could be. This also means that it’s the softest kind but the most expensive one, too.
There are also numerous ways to test if the gold you’re buying is fake or real. Examples of these are checking for discoloration through a magnifying glass, doing the float test, or skin test. As a general rule, gold should not have any form of discoloration or should not cause any allergic reactions to your skin.
2. Weight of Gold
Most gold jewelry is not a hundred percent made out of pure gold. Hence, to determine it’s value and the weight of the actual gold content, you need to know its purity in karats. Once you figure that out, divide it by 24, Next, calculate the percentage, and then you’ll know how heavy the pure gold content in your jewelry is.
3. Bullion vs Gold Coin Collections
If you’re more serious about investing in gold, then perhaps you have heard of bullion and gold collector coins. To distinguish one from the other, let’s say that gold bullion can either take the shape of a bar or a coin. Gold bullion has fluctuating values depending on the movement of the market. Therefore, it’s inherent value depends on how traders and investors deal with gold and other precious metals.
On the other hand, collector gold coins may be melted into bullion, but their value is assessed a bit differently. Just like any collector’s item, gold collector coins are priced according to their rarity. Collectors pay a significant premium depending on design, condition, and availability.
4. Gold Price
Whether or not you choose to buy gold coins online or go with collector coins, you should learn how to check for a fair price. This means you have to be diligent in checking the updated price of gold before doing any transaction. An ounce of gold can easily fetch a price of 1,300 dollars annually on average. So keep that in mind when you go shopping. If you think that you’ve gotten into a deal that sounds too good to be true, then slowly back away and do the steps outlined above before making a purchase.
5. Storing Gold
It’s perfectly legal if you want to store your gold in your home. But it isn’t really the safest option for such a valuable asset. If you don’t possess a vault or you think it’s too risky, there are two more ways you can keep your gold safe. The first is by asking your bank to store it in their safety deposit box. Next is by purchasing the service of a third-party storing company.
The first option has a great appeal for collectors and bullion buyers alike. The asset is kept safe but also very liquid. You can expect to pay around 50 dollars to 200 dollars for banks to store your gold for you. Meanwhile, if you choose to go with a depository, not only is your gold kept safe, it is insured, too. It is also extremely liquid since companies offer to buy the gold should you wish to cash in on your assets already. But unlike banks that determine annual storage price per size, depositories keep a percent of your account value as payment.
6. Risks of Investing in Gold
Regardless of how tangible gold is, it still poses some risks, just like any other form of investment. The value of gold may depreciate or appreciate in time, which means if you don’t pay close attention to its price, you might end up losing your money. And of course, since it’s tangible, you may fall victim to counterfeit gold and theft.
Now that you know the most important considerations when buying gold online, I hope we’re able to help you make the right decision for your next investment strategy. As a final word, remember to diversify. Don’t put all your eggs in one basket so that if something goes wrong, your other investments can cushion the impact of a loss.
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