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How much gold should I own?

The structure of a portfolio will depend upon the unique life circumstances of an investor, but a physical gold component of 15 to 25% remains solid time-tested guidance that undisciplined investors ignore at their peril. This is especially true with volatile financial markets for any investor who tends to treat their portfolio as though it were a stack of chips at a high-stakes gaming table in Las Vegas.

To seize opportunities at capital appreciation a higher gold component may be warranted by awareness of current events that threaten paper-dominated financial security with political instability or protracted weakness in markets or currencies, foreign or domestic. Remember, gold holds its world value precisely because it is independent of corporate performance and of the money printing presses of governments.

What types of gold should I buy?

A well-rounded portfolio calls not only for a gold component, but also for this gold component itself to be well-rounded. Different forms of gold serve different functions. Due to their additional numismatic, privacy and security value relative to bullion items, certain pre-1933 coins are the most robust investment. While any gold coins are inherently worth their bullion value, some numismatic coins may be priced very substantially higher. Their value is determined by their quality, rarity, and history - starting with the number of coins originally minted, and subsequently reduced by government recall and melt, normal wear, and loss, leaving those fewer still available for market today.

Well-chosen investments will target a happy compromise between gold quantity (see gold bullion coins) and the additional benefits of numismatics. You can be sure of a particularly sound investment (privacy gold coins) though quantity purchases of pre-1933 gold coins whenever you find them in uncirculated condition at prices near similar-sized bullion coins.

Where and how is the best way to buy gold?

To buy your gold, pawn shops, coin shops, and vest-pocket gold dealers are the most commonly considered outlets among novice gold investors. These entities operate on the basis of their existing inventory. As often as not they buy from the unwary and sell to the unwary. After a visit you may walk away with a small sum of gold coins, but caution is required against their common practice of large mark-ups and application of sales tax. Purchased as an investment product, sales tax on gold coins should be largely avoidable.

Serious investors seeking to diversify thousands to hundreds of thousand of dollars in gold will seek out a reputable gold brokerage to facilitate the exchange at the best price for delivery to you, or for segregated storage at a secure facility if you prefer. A gold broker may maintain a marginal inventory, but due to the volume of their business they specialize in making a market between their clients and counterparties - willing buyers and willing sellers. As you should well imagine, buying gold is serious business - no mere paper shuffle. From the date of transaction confirmation with your broker, expect up to four weeks to lay hands on your gold. Time is required for the transfer and clearing of the payment funds among the buyers and sellers on each side, for the subsequent secure transit (sometimes internationally) of the gold between deposit facilities, and for the final inspection, packaging, and shipment of your specific order to its destination.

Be wary of the firms that persistently use high pressure telemarketing sales tactics to bully you into the purchase of ultra-high-priced and high-commission rare coins.

The gold broker or dealer that is right for you should be one that is well-connected and involved in the gold market through a long history of service, is knowledgeable of macroeconomic conditions, listens to your needs, and offers advice appropriate for your individual portfolio.

It is recommended that you buy gold as an ongoing diversification program as your total portfolio grows. For the smaller investor, associated fixed costs per purchase such as shipping and insurance may justify a degree of investment timing - larger but fewer purchases instead of more frequent smaller ones. But in a market where conditions can change radically overnight, don't let the pursuit of saving a dollar or two stand in the way of adding meaningfully to your diversification or from seizing intermittent purchase price opportunities.

What is the best way to store my gold?

Discreet home storage such as in a safe may be appropriate for values commensurate with your general household contents, but as your gold stock increases it makes sense to explore additional avenues for added security. For example, gold won't burn, but if you live in a high rise or multi-unit residence, you must consider whether your gold would be recoverable assuming collapse of the structure in a fire. Safe deposit boxes at your bank can offer secure storage at reasonable rates. In this event, pre-1933 gold coins are favored, bearing in mind the Roosevelt-era gold confiscation which ordered Federal monetary agents to seize bullion being stored in such facilities.


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