Page 44 - Introduction to investing in Gold

The Beginner's Guide to Investing in Gold
Things to Think About...
Buying gold is a lot like buying fine wine. It’s important to know not only where it comes from but also how and where it’s being stored. It’s all very well getting a great deal on a case of wine, but when you come to sell it, people want to know about its history (for example, where has it been stored?). And unless they’re happy, you’ll end up selling it at a discount. If you’re planning to drink it, you want to make sure it’s going to taste nice, so you still want to know a lot about it – for example, was it bought from a reputable source?
It’s the same with gold.
It’s important to not only acquire it from a reputable dealer but also store it correctly, preferably with the people you bought it from. If it hasn’t left their premises, they’ve got no reason to question its integrity. And there’s a lot of fake gold around.
Use an established dealer that uses X-ray Fluorescence Spectroscopy (XRF) machines. XRF is a non-destructive analytical technique used to determine the elemental composition of materials; it involves high-grade photography and trained numismatists.
You also need to think about why you’re buying it, for example:
1.How long do you plan to hold it?
2.Is it predominantly an investment or for insurance?
3.Is it divisible? If you plan to use it, then you may want to take delivery of
a few coins rather than a large gold bar. For example, if you’ve got four grandchildren and one day it might be theirs – then having one big bar may not make a lot of sense. Give them a coin each rather than have them fighting over one gold bar!
I’ve done several interviews with IG Index. In one, Ross Norman, the former CEO of Sharps Pixley, held up a Kilo bar of gold and waved it in the air, telling us it was worth more than $30,000. Whilst this was great evidence of both the high value and portability of gold, it’s probably not the best way to hold it if you want it for insurance. If you’re holding it for that purpose, I personally would look for something with a lower denomination, such as coins.
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