Buying gold online eliminates one of the most traditional protections of being able to physically see the gold prior to providing payment to a seller. As a result, the risk involved is even higher than normal. That said, thousands of people buy gold online every day, more so in the last ten years than has been bought in the last 50 years through traditional means.
Buying online doesn’t have to feel like a visit to a pirate-infested Barbary Coast. There are a couple of tips buyers can follow to protect their own interests while still obtaining quality gold for investment purposes and profit. These tips for buying gold online include:
• Focus on Metal vs. Paper – The first and primary gold choice for purchase should always be government-issued gold bullion bars and coins. While there are number of options, including exchange traded funds, buying the actual metal issued by a government mint avoids a lot of problems. The value and metal is confirmed without question. Once in hand, it can’t disappear like a paper position can (just look at Bernie Madoff accounts to wonder how fast paper loses value). Coins are the better choice since they are easy to transport and store as well.
• Buy Common Gold Bullion Coins – The best known and respected gold is produced as U.S. Gold Eagles, Canadian Maple Leafs, and South African Krugerrand coins. These coins always maintain demand and don’t lose value except with the gold spot price for a Troy ounce. In some cases, due to demand, they can even generate a bit of collector’s premium as well.
• Buy gold online from a respected Dealer – Granted, dealers will charge some premiums on top of a coin’s worth, but when buying online a good, respected dealer, the extra cost is worth the protection and guaranteed delivery of the coin or bullion purchased. Consider it a cost of buying gold at a distance. Hopefully, gold will rise over time enough that it won’t make a difference anyways.
• Stick with One-Ounce Gold Coins – While all gold in a hot market can sell, fraction coins and bullion can be harder to move. Plus, shipping and insurance costs bite into smaller profits. One-ounce coins are the most common and represent a sizable investment with each one. They buy and sell quickly and they are easy to estimate value versus the spot market.
• Don’t Get Caught Up in Collector Coins – Rare old coins have their own market rules which don’t always follow the value of gold. They rely more on grading and rarity than gold metal value. If chasing gold for investment sake only, sticking with bullion is a far better place to be as the values are predictable and verifiable. Collector coins swing wildly in valuation, which can’t always be recovered on resale.
Finally, always remember that if a deal seems too good to be true, that’s the moment to back away as quickly as possible. Most scams and gold coin frauds online occur because people think with their greed for unbelievable profit versus using a logical brain. Honestly, why in the world would anyone sell a bona fide gold coin for half its current value? They wouldn’t, period. Don’t part with funds trading gold online without thinking logically on every deal.
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