Not All Gold is Created Equal
TAKE PHYSICAL POSESSION
There are many different ways you can invest in gold, and they can each have drastically different effects on your portfolio. One important thing to consider is the importance of taking physical ownership.
It may seem convenient to invest in a gold stock or bullion investment fund so that you don't have to worry about gold storage. However, there is a very real danger that the gold you are investing in does not actually exist. It is common for companies to lease out gold supplies because they assume that not all of their investors will want to withdraw their gold at the same time.
There is even concern that the gold the U.S. government has been holding for other countries no longer exists. Germany recently became worried enough that it asked for 300 tons of gold to be returned from the Federal Reserve Bank of New York. This gold represents a small fraction of the total gold supposedly being held at this location, yet the U.S. responded that it would take seven years to return this gold to Germany.
Another concern is that there is not enough gold to cover even 5% of the gold options being traded on the COMEX. The intention of these contracts is typically to bet on whether the price of gold is going to go up or down. While the buyer of the contract has the option of buying the gold at the stated price upon termination of the contract, this is rarely done. The buyer rarely takes ownership. However, if any significant number of people decided to actually exercise their option to buy then the majority of contracts would be in default.
For all these reasons, when investing in gold, it is wise to take physical possession. To diversify your portfolio, there are two separate ways you can invest in gold and still take physical possession:
Gold bullion serves as an excellent inflation hedge because it holds its value over time. While buyers of paper gold focus on the day-to-day price swings, owners of physical gold understand that gold consistently is worth more dollars over time as the value of the dollar declines. One advantage of bullion is that it can always quickly be converted back to dollars in an emergency.
Investment-grade coins are a way to diversify both from the dollar and from gold bullion. The value of an investment-grade coin is largely independent from the gold price. An ounce of gold bullion has no advantage over the millions of other ounces of gold in the world. However, coins with history and rarity can have a significantly higher value during times of high demand. There have been many times in history where investment-grade coins have outperformed bullion, making investment-grade coins an important part of a diversified portfolio.
When buying investment-grade coins it is important to choose your dealer well. Many coin dealers will charge high premiums for these coins. Also, many dealers are not knowledgeable on the conditions that make a coin likely to appreciate in value.
RPMEX is a dealer with experience that you can trust. We have gained many loyal customers that had previously had bad experiences with other companies. Our complaint-free "A" rating with the BBB speaks for itself. Give us a call to find out more about your different options when buying gold.