Your Precious Metals Primer

It doesn’t matter if you’re new to investing or an old hand at it, you can still think seriously about buying gold. Of course, you can buy your gold through an exchange-traded fund, or via stocks, but increasingly people are choosing to buy physical gold, or bullion, instead.

Bullion isn’t such an old-fashioned idea as it might seem at first, although it’s certainly an old one that’s stood the test of time. Buying gold bullion is also pretty easy because it still comes in coins, bars and ingots.

Should you buy coins, bars or ingots?

No one option is any better than the others, it depends mostly on what you plan to do with your gold. Coins offer more flexibility when it comes to selling, as you can imagine; if you have 30 coins, each worth £100 and you need to raise £500 for a holiday, then you sell five. You can’t do this with a bar – you either sell it in its entirety or not at all, unless it’s of a size that’s worth around £500. The best thing to do is to buy a mixture of coins, ingots and bars from Golden Eagle Coins as this will offer much more flexibility.

Learn to tell your bullion from your numismatic coins

Your bullion coins will be worth the spot price of gold at any one time, which is predictable and follows well-known rules. Then you have your numismatic coins, which are rare and can attract the really big, headline-grabbing prices. These are collectibles and their value is determined not so much by the spot price of gold as by their rarity and by current trends within the market. If you’re new to precious metals, you’re best off sticking to bullion for a while as numismatics is a whole new ballgame. 

Work out your budget

By far the biggest determiner of what you invest in and how much of it you buy is your budget. You should know how much you have to spend on your metals and it’s a good idea to watch the market for a while before you strike so that the spot price is reasonable. Never rush into a purchase.

You shouldn’t ever be in a hurry to sell it either. You’ll have to sell your gold at just below the market price, as the dealer has to sell it on and make a profit. You should wait until your stash has appreciated in value by enough to make it worth it. If your £1,000 investment in bullion has appreciated by 20 per cent since you bought it (which means it’s worth £,200 on the current market) and you sell at 2 per cent below the market price, you’ve still made an 18 per cent profit.

Where should you store your gold?

The best thing about holding bullion is that you actually have access to it if you need it in an emergency. If there’s a bank crash or you have a financial emergency and no easy access to credit then your metals are a real asset.

However, you can’t just leave your gold lying around or use your bars as bookends! You need to store your bullion very securely indeed, so most investors install a safe somewhere on their property to keep their gold in. Some people divide their gold up between a home safe and a bank vault so they’ve got the best of both worlds – high security and easy access. However, if you decide to keep some of your bullion at home, make sure you’re insured properly.

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