Gold and silver make excellent investment options, but only if you know what you’re doing. These metals can be volatile, and it’s easy to make a mistake when buying or selling. As a beginner, having a checklist is even more critical to ensure you get the best possible deal. Here’s what you should know.
The Market Value of Gold and Silver
Before you buy gold & silver coins, understand the market value, which is the current price buyers are willing to pay for an ounce of gold or silver. This changes daily, and sometimes by the minute, so stay up-to-date.
You can find the latest prices online, in newspapers, or on TV shows specializing in commodities trading. Note that the market value is not the same as the coin’s face value – a gold coin with a $5 face value may be worth more, depending on the weight and purity of the gold.
Also, know the actual cost per ounce. This is the market value plus a premium covering the dealer’s expenses and taxes. The premium is lower for larger coins and bars because they have less overhead. When in doubt, ask for a quote in writing before buying.
The Dealer or Seller’s Reputation
When you’re ready to make a purchase, take time to research the dealer. There are many reputable dealers, but some will try to take advantage of you. Make sure the dealer is a member of an accredited and recognized organization.
Check online reviews to see what others have said about the dealer’s business practices. The seller’s ability to meet their delivery promises, pricing, and customer service are key areas to check.
The Purity and Weight of the Gold or Silver Coin
When looking at a gold or silver coin, know the weight and purity of the metal. The weight is in troy ounces – not to be confused with the avoirdupois ounce. One troy ounce is equal to 31.1 grams, while one avoirdupois ounce is equal to 28.3 grams.
The purity of the metal is in karats (for gold) or fineness (for silver). 24 karat gold is pure gold, while 18 karat gold is 75% pure. For silver, .999 fineness is pure silver. .925 fineness is 92.5% pure.
Timely Delivery Is a Critical Factor
When buying gold and silver, you want the assurance you will receive your order promptly. The effort is significant if you purchase coins or bars to hedge against inflation or an economic downturn.
Find out the dealer’s delivery policies, and ensure you’re comfortable with them before the purchase. To understand the delivery process, ask the dealer to walk you through it step-by-step. Also, find out if there are any storage fees and for how long.
Understand The Risks Involved
Like any other investment, buying gold or silver has risks. The price of these metals is volatile, and it’s possible to lose money if you don’t know what you’re doing. In addition, there is the risk that the dealer may not deliver on their promises. To protect yourself, only buy from a reputable dealer, and don’t buy more than you can afford.
Also, diversify your investments. Don’t put all your eggs in one basket. Start small to get a feel for the market if it’s your first time buying gold or silver. Choose a dealer who specializes or has a good reputation in the type of coin or bar you’re interested in.
Understand the Risk of Identity Theft
Online gold and silver dealers are a convenient way to buy these precious metals. However, there’s the risk of identity theft when you give personal information to people you don’t know well.
To reduce this risk, only do business with a reputable dealer, and make sure the website is secure. You can tell if a website is safe if the URL starts with https://. Also, look for a padlock icon in the browser’s address bar. The dealer’s website uses SSL (Secure Socket Layer) encryption to protect your personal information.
Take Your Time
Do your homework first when buying gold or silver coins, bars, or rounds. Familiarize yourself with the terms, and don’t be afraid to ask questions. Research the dealer, and make sure you’re comfortable with their policies before you buy. With adequate knowledge, you’ll confidently purchase gold and silver and avoid the risks of doing business with less reputable dealers.