Should beginners buy gold bars and coins?

Even if you’re a seasoned investor in other markets, beginners to gold investing may face a learning curve when it comes to buying the precious metal. 

Not only is the process different from traditional stock and bond investments, but there are plenty of options to choose from. While some investors may benefit from indirect exposure to the gold market in the form of gold ETFs or stock in gold-related companies, physical gold has benefits for investors with an eye for gold’s value directly. As a beginner, choosing gold bars and coins may offer some valuable benefits for your portfolio.

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Should beginners buy gold bars and coins?

There are a few reasons any type of gold investor, including beginners, may find investing via gold bars and coins beneficial.

For one, physical gold is highly liquid. Because gold is recognized as a currency and store of value worldwide, it’s generally simple to buy and sell at any time. 

Gold bars and coins also have the benefit of offering a direct investment in the value of the precious metal. This can be useful if you’re looking to add gold to your portfolio for its reputation as a safe store of value and a way to diversify your portfolio. The value of your gold bars and coins will fluctuate alongside gold’s spot price. So when the stock market trends downward but gold’s price remains steady, your investment in gold bars and coins can help keep your portfolio stable. 

But there are some drawbacks you’ll want to keep in mind, too. On top of the price of your gold, including any retail markups, you’ll need to pay for insurance and storage. Depending on how much you decide to buy, storage may be as simple as an in-home safe or require working with a third-party storage facility. When deciding how much gold you should invest in (experts recommend no more than 5% to 10% of your overall portfolio), make sure to factor in these added costs.

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Best ways to buy gold bars and coins

If you’re interested in investing in physical gold, these are some options to consider:

Buy from a reputable dealer

If you’re planning to buy gold bars and coins from a dealer, retailer or private collector, make sure you do your research beforehand — such as reading reviews or customer testimonies from other people who have bought gold from them. Some red flags you’ll want to avoid include any unrealistic promises about getting rich quickly or a lack of transparency about pricing or quality.

You’ll also want to research exactly what gold bars and coins you may be looking for. Focus on specifications such as price, weight, purity or even the specific gold coin or gold bar you want. You should also know the current price of gold per ounce — this can help you determine whether the price you’re quoted is a good deal or not. 

Gold IRA

A gold IRA may be an option worth considering for retirement-minded gold investing beginners. This is a self-directed individual retirement account that you can use to store physical gold (with the same benefits and requirements as regular traditional or Roth IRAs).

However, there are important restrictions you should know about buying gold bars and coins for your gold IRA. Because gold and other precious metals are generally considered collectibles (and therefore not eligible for IRA investment), you’ll need to make sure the gold bars or coins you buy are IRA-eligible. This includes specific gold currencies that meet weight and purity standards. 

Another detail of buying gold bars and coins for a gold IRA is that you won’t be able to keep the physical gold yourself. The IRS requires investors work with approved non-bank custodians to store the gold in their IRAs. 

You can work with a trustworthy gold investment company to help you both buy eligible gold and find a qualified custodian. Find out how you can benefit from a gold IRA with a free investment guide today.

The bottom line

Investors who are beginners to gold investing may find several reasons to consider physical gold in the form of bars or coins. In the right allocation, physical gold can help you enjoy gold’s benefits as an inflation hedge and portfolio diversifier. Just make sure to do your research before you buy — whether you’re planning to invest with a reputable online or in-store gold dealer or you want to keep your qualifying gold investment in a gold IRA for the long term.

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