How to Buy Gold Bullion Securities
While it is popular to hold gold in uncertain economic times, as it is a consistent store of value amid concerns of inflation, it can be inconvenient and risky to store and transport physical gold. Gold bullion securities are an alternative. Each share of a gold bullion security represents approximately 1/10th an ounce of gold that is stored and insured in a remote location.
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Things You'll Need
- Capital
- Computer with Internet access
- Broker/brokerage firm/money market account
Instructions
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Buying Gold Bullion Securities
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Determine available capital. Gold bullion securities, much like gold itself, can be volatile. Keep this in mind and allocate an amount of money that seems safe for investing, depending on the makeup of the portfolio. Investment bank Charles Schwab recommends never putting more than ten percent of the portfolio in one stock. Gold bullion securities are not exactly a stock, even though they are traded on the stock market, as they represent not holdings in a company but actual ownership of bullion. So, the ten percent rule may be flexible in this case, but it is still important to do an accounting of finances before embarking on any investment.
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Find the right bullion security trader. The first gold bullion security, according to Goldprice.org, was launched in 2003, but since then, many competitors have entered the market. One factor to take into account is accessibility. Most of these companies do not have headquarters based in the U.S., due to political reasons, so it would be worthwhile to try calling the company to see if representatives are easily accessible. Another factor, of course, is longevity and reputation. You are trusting this company to store and insure gold, so it's important that the company has proven it can do this. A final factor to consider is the geopolitical atmosphere. Are the headquarters based in a politically stable region, where the gold is not likely to be seized by criminals or corrupt governments?
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Purchase the securities through a brokerage firm. Gold bullion securites are traded on the stock market. The ticker symbol for the original Australian Gold Bullion Securities company is GBS. Other securities are traded under a grouping called ETG, for exchange-traded gold. Do not confuse ETGs with gold ETFs, which are exchange-traded funds, meaning they are mutual funds that are invested in the gold market. These mutual funds can be a good investment, but they are not the same as owning gold at a remote location, as gold bullion securities are.
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Tips & Warnings
Investigation before investment is crucial. Make sure that the gold you purchase is adequately insured or you will be liable for any theft or damage.
