The aim of any investment is to make money and gold has proven to be one of the most trusted ways of achieving this aim. With confidence in financial institutions shaken since the crash in 2008, gold offers a trusted alternative to stocks and shares, or government bonds. Start by avoiding the high fees and dealer mark-ups of the retail gold market. Also, make sure you can sell your gold immediately for full value, and quickly receive payment, when you choose.
Although long-term protection of your wealth should be the priority when buying gold, it is very possible to make money from this precious metal in a similar manner to trading stocks and shares. If you are planning to grow your wealth through alternative investments methods such as gold but aren’t sure how to, then here are some of the top points to consider.
When should you invest in gold?
Buying gold at the right time will make a difference in how much money you make when you sell, so volatility is the thing to watch out for. Despite the fact that the price of gold varies from time to time, both ends of the spectrum offer an investor a window of opportunity; dramatic price changes can provide the perfect time to buy (if low) or sell (if high).
Most importantly, you should invest in gold when the time is right for you. If you’re diligent in setting aside your own funds, there will come a time when you are in a position to invest.
Gold price forecasts
Predicting the gold price is educated guesswork. It is impossible to know precisely how any asset will perform in the long-term.
Shorter-term forecasts are a little more reliable but even then, it can be difficult to predict what could happen in the wider world that could drive the price higher or lower. For example, in 2016 the unexpected result of the Brexit referendum vote sent the price climbing as investors reacted to the shock decision and the uncertainty of Britain’s economic future. Any unexpected political announcements can have this effect, but, otherwise, short-term forecasts are more accurate than longer-term.
By keeping up to date with gold news and economic trends it is possible to build up an educated picture and outlook of what could happen to the gold price.
One of the most traditional of gold uses is in jewellery, so any old jewellery that might be damaged or simply out of fashion could be an opportunity to make money. Digging through an old jewellery box and finding a few gold rings or earrings could see you make an impressive sum when selling.
How to make money from gold investment?
- Buying physical gold bars and gold coins
Gold bars, gold sovereigns, dublooms, pieces of eight or even sequins (originally a type of gold coin) can be bought and stored. In fact, there are even gold vending machines that exchange a card or cash payment for a lump of gold.
There are two main benefits to this. Firstly, if you’re buying British gold coins, then you avoid tax on any money you make when you sell them.
Secondly, you actually have the gold – meaning it’s completely within your power and no other firm or company is needed.
Gold bars (ingots) and coins are the most common ways to buy physical gold, with coins being a bit more flexible when it comes to selling. Some rarer coins carry a premium, but most, like the very common South African Krugerrand, don’t.
You will, however, pay a premium on the price of gold to buy physical versions of it, although the larger dealers will deliver it straight to your house. Big UK dealers include the Royal Mint, who buy and sell non-British coins and gold bars too.
As far as storing it goes – most people keep it at home, generally in a safe, or in safety deposit boxes in a bank. However, if you are keeping it at home, you will need to tell your insurance provider about it to check you’re covered.
When it comes time to sell, you will be hit by a premium again as this is how gold dealers make their money. Using a large dealer like those mentioned above is advised, but will likely cost some percentage of the value of the gold. These margins can be brought down through online searches for the best rates, but be sure the people you are buying or selling from are legitimate before handing over any cash.
- Online bullion dealers
If you’re not worried about actually having the gold in your hands, online dealers are a far cheaper way to buy gold. Your gold is held in secure vaults, and can be easily bought and sold in whatever quantity you fancy. The rate you get is also far closer to the current price. Another benefit is the speed of dealing, with almost instant buying and selling once you’re signed up. In fact, it’s now possible to link your bullion to a payment card and not just hold gold but actually spend it, in any amounts, anywhere.
However, there are some drawbacks to this method.
First, major dealers charge for storage and insurance and while that cost is typically low, it can build up over the years. There’s also a minimum charge with some companies that could hurt smaller holdings. Finally, you will be subject to capital gains tax.
- Gold tracking funds – the cheapest way to invest in gold
If what you care about is the price of gold, and aren’t bothered about directly owning some of the precious metal yourself, you can invest in it through trackers. These are bought and sold in a similar way to shares, can be held in an ISA, and many are even backed with actual gold.
However, trading shares, even when they’re backed by physical gold, incurs a broker fee too. But, the good part is that this is only a few pounds, and that’s frequently fixed no matter how large the transaction.
This article is for information purposes only.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.