By Carmelo J. Montalbano
How to Buy and Sell Gold
Investors can buy and sell gold in stocks and futures or as a physical commodity. Gold coins may carry more value than other physical gold holdings because of their numismatic value.
By Carmelo J. Montalbano
OverviewThere are many ways to buy and sell gold depending on the circumstances most suited to your particular needs and comfort level. Consider whether your holdings are long or short term in nature and whether you wish to hold the physical commodity or the financial security.Step 1Buy gold outright as bars in 1 oz. multiples. Check certified brokers as pricing is competitive. Add to the daily quoted price of gold the broker’s charge or premium and the cost of shipping. Know that premiums usually run about 2 percent. Insure your shipments. Write down the serial number of the bars when they arrive. Use the serial numbers when you sell in order to confirm the size and quality of the bar. Usually it is easier to sell through the purchasing broker.Step 2Buy physical gold coins, which have numismatic value and will not trade just on the price of gold, but on historical value. Study and understand relative coin values and consult several experts. Expect to pay a premium for gold coins reflecting their scarcity as a numismatic value. Sell coins by getting competitive quotes from reputable dealers. Get at least three quotes including a quote from outside your immediate area. Coin prices often vary among regions of the country.Step 3Buy an exchange traded fund, or ETF, which holds physical gold. Exchange traded funds are single purpose funds that charge a small fee to hold and manage the gold bullion. Know that shares of an exchange traded fund represent a proportionate amount of the gold held in storage. Most exchange traded funds are traded on the major American exchanges and represent a quick, liquid means of owning and selling gold if the investor does not wish to hold physical gold.Step 4Buy gold mining stocks. Understand the company finances and how the gold is sold — whether it is hedged months into the future or sold at current market value. Gold stocks represent current and potential price moves of the physical commodity as gold underground is delivered many years out. Gold mining stocks, because they are companies that must show earnings, often over- and under-shoot the price of gold as sentiment changes.Step 5Consider gold as a commodity trade on the Chicago Mercantile Exchange’s futures market. Futures trading is risky and highly leveraged. Entry prices must be precise, and limits on losses must be tightly managed. Understand that a small maintenance down-payment can control many ounces of gold. If you expect a large movement in the price and can absorb the risk, it is the most efficient way to control large amounts of gold.skill4tipKnow whether it is important for you to own physical gold or whether you want to trade the movement in gold easily with stocks or futures.tipsKnow whether it is important for you to own physical gold or whether you want to trade the movement in gold easily with stocks or futures.warningNever trade a commodity or stock with a strategy that has not been tested in bull and bear markets.warningsNever trade a commodity or stock with a strategy that has not been tested in bull and bear markets.keywordbuying gold selling commodities exchangekeywordsbuyingkeywordsgoldkeywordssellingkeywordscommoditieskeywordsexchangeResourcesreferenceGold Trading on the Chicago Mercantile ExchangereferenceBuying Physical GoldresourceFree Gold ETF Screener
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