5 rules for investing in Gold:
1. Treat Gold Like a “forever investment”
Gold doesn’t pay you while you hold it. The goal is here is simply preserving buying power and guarding against worst-case scenarios.
Gold has inherent value as a lasting, portable, universally recognized form of wealth. It essentially exists outside of government-controlled financial systems.
Consider Gold as the ultimate “forever” investment and as the insurance policy you never hope you’ll have to use. There’s never a bad time to buy some Gold. “Dollar cost average” into gold or silver to smooth out shorter-term price swings and build a solid stake over time.
2. Physical Possession
The only true way to own gold as a long-term crisis hedge: store it physically in a safe, always accessible place.
If you want to own gold as a last resort, always and immediately available, especially in a crisis or dooms day scenario, only physical metal in your possession fits the bill.
3. 2 Choices
You basically have two major options when it comes to physical gold: bullion via bricks, bars, or coins or numismatic, e.g. collectible coins.
When you go the route of bricks, bars or coins, you will typically pay the lowest premiums over spot prices. Assuming you buy items from reputable mints, you should have no problem if (or when) it comes time to trade your gold for money or something else.
If you choose collectible coins, you have to know a lot more about this: condition, rarity and a lot of other factors matter.
And even if you look at one particular coin you’ll see that premiums over spot prices can fluctuate greatly. There are more variables involved in finding true value in anything other than plain bullion. That can be good or bad depending on how much you know.
4. Make Sure You’re Getting Real Gold
Make sure what you’re holding is actual gold. The weight of the piece needs to add up. It shouldn’t stick to a magnet. And there are very cheap nitric acid kits you can use to test the surface of a gold item. So, buy from a reputable source, one that will charge you a fair price and deliver reliably.
5. Don’t Have More Than 5 – 10% in Precious Metals
Stocks, bonds, real estate and other types of assets can experience huge price swings just like gold. Those assets generate income and your physical gold doesn’t. While recognizing the value of holding some physical metal through thick and thin, it should not represent more than 5% to 10% of your total investable wealth.
Precious metals are like insurance policies: They should maintain their buying power and in the event of a major catastrophe, they will be there when you need them. However, most of your money should be working for you, producing reliable income that can be reinvested and compounded for the best possible results.