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Wednesday, February 08, 2006

How to Buy Gold Cheaply

How to buy gold cheaply is a question many new collectors often ask.

Actually it is not the right question. The question is 'Where to buy gold cheaply!' In fact cheap is a relative term and really you will never buy gold at less than the current value of the gold at the time you buy it plus a premium depending on the quanitity of gold purchased..

The most popular sources of gold for collectors are mints, dealers, auctions, post offices, shops etc, and how much you pay for the gold depends very much on the following four factors:
  • What type of gold you buy
  • Where you buy it
  • From whom you buy it
  • How much you buy
The best way to buy gold cheaply of course is to buy before the value increases. Then you have bought your gold cheaply. As gold is currently on a rising trend now would be a likely time to buy gold.

Here are some points to be aware of when buying gold.

If you buy from Post Offices, shops and small dealers and you buy small coins with little value of gold but look fanciful and come in expensive looking presentation cases, you are probably buying the most expensive gold around. The cost of mark up as the coin goes from the mint through to wholesalers and then the shop plus the shipping, cost of the presentation case, often more than the value of the gold, will almost certainly guarantee you have paid top dollar for your gold. It will take a long time for you to recoup the value of your gold this way.

But if you buy solid gold coins and large bars with little presentation, just a hermetically sealed plastic transparent case, from a mint or established dealer, you will, in all likelyhood get more gold for your dollar in that you are paying for gold and not plastic, wood or whatever the presentation is made of.

The premium or mark up you pay for bullion bars is usually less than coins also. A once ounce bullion bar will attract less mark up than a one ounce gold coin. The Perth Mint, for example, sells bullion bars of gold by the gram. From one gram up to 10 grams. Guess which is the cheapest per gram to buy? The 19 gram bar of course. Buying half a kilo or one kilo is better although you have to outlay more money initially of course.

In other words. the larger amount of gold you buy at one time, proportionately, the smaller the mark up by the seller. This means laying out thousands instead if hundreds of dollars, but if it is done for investment purposes rather than just a hobby then it is a worthwhile investment.

Also always buy in at the top end of your budget.

But if you like gold coins, buying established and popular 'in demand coins'. These command a better resale price and so keep, and can even increase, their value over time.

Buying gold cheaply involves browsing the various dealers and mints, becoming acquainted with who the best dealers and mints are and what the best coins and bars to buy are. Doing the due diligence, in other words.

Following the above will certainly give you a grounding in how to buy gold cheaply and give you also the best chance of building a nice, satisfactory collection of gold bullion in the form of gold coins and gold bars.

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