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When to Sell Gold

It was agreed that Japan will spend

President Barack Obama signed his stimulus bill into law today, and the stock market took a nosedive. On the flip-side, the price of gold reached a 7-month high, trading at $967 per ounce for April futures. The price of gold has gone up 9.4 percent this year.

The price of gold typically goes up when there is fear in the economy, because it is seen as a safe investment. Many investors are concerned with the US Government’s ability to pull the country out of a recession, so they dump stocks and turn to gold as a hedge bet.

Some gold-pundits see gold reaching highs of $2,300 per ounce down the road.

Seasoned forecaster Dundee Wealth Inc chief economist Martin Murenbeeld and US Global Investors precious-metal-fund comanager Ralph Aldis both cite the exact same long-term $2 300/oz figure, Murenbeeld explaining that the $850/oz gold-price peak of January 2008 translates into a $2 300/oz peak in today’s money.

Sources:
AP
Mining Weekly

But there are many ways to invest in gold. Let’s take a look at the common ways to own or invest in gold, along with some general advice.

Gold Bullion

By far, the best way to invest in real gold is gold bullion. It is the most liquid and guaranteed form of gold. When dealing in professional gold markets, gold bullion is bought and sold in the form of Good Delivery bars. Good Delivery bars are certified, at least 99.5% pure gold, and are very carefully tracked when moved to ensure that they are never tampered with. This ensures that if and when you are ready to sell them, you will never have a hard time finding a buyer.

Most novice gold bullion investors will need at least $10,000 to get started if they do not know what they are doing. Commission fees are high, and storing the gold somewhere safe can be an issue. But there is a little known secret for the rest of us. The website is called BullionVault, and it eliminates most of the issues associated with buying gold bullion. This website allows smaller investors to buy gold at the prices big buyers pay. Low commission fees, storage is handled for you, friendly customer service, and the website is really simple to use.

Tip: Use BullionVault for buying gold bullion. Go Directly to BullionVault, or read more about the company. Otherwise, if you are a big time gold buyer, then you probably already know where to go!

Gold Stocks

Gold stocks usually refer to gold mining companies. You’re not actually buying the gold, but rather in the company that mines it. The value of the stock will depend on the demand for gold, how fast the company is growing, and many other factors. The risk is when the gold runs out at the mine, the stock will likely crash. No mining company is able to predict the amount of gold it will mine and for how long, so there is some significant risk involved.

Tip: Like any stock investment, it pays to do your due diligence. Do not blindly invest in gold stocks because the price of gold is up. Research the companies thoroughly, keep an eye on their performance, and after enough time make your decision.

Gold Jewelry

Gold jewelry is the easiest way to invest gold, but also the worst. Unless you are an avid jewelry collector or expert, there is no way to tell what you are paying for. Gold jewelry will almost always lose value as soon as you buy it (the same thing applies to driving a new car off the lot.) Resale value for gold jewelry will always be less than what you paid. The reason is because when you buy gold jewelry, at a jewelry store for example, you are paying a premium for the store’s overhead, marketing costs, and the labor for making the jewelry. The price of the jewelry is significantly more than what the actual gold is worth.

Gold jewelry is not very liquid either. If you want to off-load jewelry, you have to go through second-hand markets like eBay or classified sites, and even then it can be hard to sell.

Tip: Never buy gold jewelry as a gold investment. As a matter of fact, when gold prices go up, you’re better off selling the jewelry you don’t want for fast cash. You can sell broken and junk gold jewelry by clicking here.

Gold Coins

Gold coins can also be a good investment in gold, but you have to be careful where you buy them from. Collectible gold coins are a good investment because their quality and content are guaranteed. There are many kinds of gold coins available, and they seem to be issuing new ones all of the time. You can “strike gold,” so to speak, if you’re holding onto a coin that suddenly becomes a hot collectors item.

Gold coins are easier to sell than jewelry, because there are is a market for them. Some coins will increase in value over time, while others will hold their value if they are not at all scarce.

Tip: Research the gold coin collector niche before making a purchase. It is always wise to invest in gold coins when the price of gold is low. When tough times hit, the demand for gold coins can skyrocket. In fact, demand can go so high that the US Mint stops selling gold coins because they cannot produce enough. There are many online sources for buying gold coins, so look and ask around. Unfortunately, we currently do not have a recommended source for buying gold coins.

But gold jewelry is not the best way to own gold. As a matter of fact it is probably the worst. The real value of the jewelry is subjective and prices change with the craftsmanship, design, and other gemstones. Unless you are a seasoned jeweler, stick to jewelry for what it is: an accessory. Sell it if you have and need money. Buy it if you can afford it financially.

What are some of the other ways to own gold if your plan is long-term investment?

Gold bullion bars and coins

This is a common way to own gold. Bullion bars and coins come in many different shapes and sizes, such as the American Eagle gold coin. They are a cost-effective way for investing in gold that you can actually touch. Weights will vary from piece to piece, but they should all be close to, if not all, solid gold.

Allocated Accounts and Gold Certificates

Allocated accounts are the most secure way to invest in gold. A recognized dealer stores and manages the gold, and you have an account to reflect the actual value. They do this for many people at a time.

Gold certificates are similar, but the transfers and payments in gold are made electronically instead of transferring the actual gold. The physical gold is stored in vaults whether at banks or currency operators.

Gold Futures

Gold futures are essentially contracts that promise to make or take delivery of gold, with a specified quantity and quality, at a predetermined date with a predetermined price. Gold futures are a risky way of investing in gold (as its not technically a long-term investment). You can make a lot of money with gold futures, but you can also lose a lot if you don’t know the gold market.

Shares and Funds

These shares and funds not only invest in gold, but in the companies that produce gold themselves. They offer a very diversified investment opportunity.

Funds like Merrill Lynch can perform very well, and have been known to outperform gold. You are essentially investing in a company, or many companies, that mine, refine, and deliver gold and gold products. The downside is that you are often investing in companies that operate in the 3rd world, so learn about the human rights performance of a country if that is something that concerns you.

Gold Exchange Traded Funds

Exchange traded funds are traded on the stock market and are close in value to the actual gold asset.

To learn more about gold investing, you can visit this gold investment website