So you are ready to buy gold and silver! You’ve seen a ton of commercials on TV pounding the importance of physically owning your precious metals, and you’ve heard the myriad of reasons why you must own it. You’ve made the decision… you’re ready now to start buying! Now what?
Do you know how to ensure a safe and confident purchase? I’m going to make this really easy and simple for you. There are three things you really must know to buy your gold and your silver the right way and with confidence. You do want to buy with confidence, right? OK, so here are three essential things you need to know.
- Authentication: You need to know how to authenticate, so you know it is real. It would really be a shame if you finally went out and bought some bullion, only to find out later that it wasn’t even real. To avoid this pitfall, you need to know how to authenticate your purchases before you buy. The subject can get deep and it is not realistic to go into the pros and cons of the various methods for authentication here, but I do want to briefly share what those methods are so are aware of your choices. There are three ways you can test the authenticity of your bullion… those methods are chemical testing, electronic testing, and physical testing. The testing methods you choose will be based on the types of purchases you are making, the volume of your purchases, and your budget for testing (particularly, some of the electronic testers can be pricey). Chemical and electronic testers are pretty much what you’d expect them to be. Physical testing includes testing weight, size, and sound (yes, sound) of the bullion you are testing.
- Valuation: You need to know how to determine value, so you don’t overpay. To determine value, you must know the weight, the purity, and the trading price (known as the spot price). Weight is straight forward and is a measurement of the weight of a given piece of bullion. But weight is only part of the equation… we need to also know how much of the piece is pure. For instance, if a piece of silver bullion is 50% pure, then the silver content would be 50% of the weight. Once you know how much silver (by weight) is in the piece, you can easily figure the value using the spot price. Note that trading prices vary slightly based on premiums charged by dealers. I just cannot over stress the importance of your ability to determine value so you can make smart buying (and selling) decisions.
- Strategy: You need to understand your own strategy, essentially the real reason why you are buying these precious metals in the first place. This is more important than you may initially think because it will help you choose the correct bullion. Bullion comes in many different sizes, shapes, and value, and you will need to make purchase choices based on your objectives. Your choices could differ if you are buying for wealth protection, or if you are buying to hedge against currency fluctuation, or if you are buying to prepare for an economic meltdown. Whatever your reasons, you must know why so you can make the right choices. And here’s an extra tip: You’ll also need a strategy for storage.
Buying gold and silver is simpler than you think, but one mistake can cost you big time. After all, precious metals are valuable, and your purchases can (and should) really add up. I hope you found this article helpful on your journey.