Question: What is the best way to invest in gold?

I'm a believer in investing in gold right now in this market. I'm new to investing and do have an online stock trading account. Some people said the way to do it best is to get it in coins so it's liquid if I ever need to. Which is actually better? Is investing online risker? I know by buying coins I would have to invest in security and/or storage of it somewhere.

Answer:

As a buyer/seller or gold I can talk to this question. The real question is -- are you interested in gold because you think the world is coming to an end or the economy is going to collapse, or are you buying it as an investment? Your answer will determine how you buy. If you have any fear of the future or if you think the economy is collapsing then your only choice is to purchase gold coins or gold bullion. I use Kitco.com to check pricing and so on. Gold is very expensive as of this writing, almost 1800/oz. You might consider silver as an alternative. At about 40/oz you can get much more silver for your money. Also, if you have old silver coins you can sell them for their melt value and can always check that on Coinflation.com. In any event, if you are purchasing coins or bullion you can easily find a trader in your area. I use Boston Bullion (bostonbullion.com). Make sure he does not keep records of your name because the US once seized all gold (during the Great Depression) and you don't want them looking for you if they want your gold. Remember when you buy or sell gold there is a premium paid to the seller/buyer that is from 2 - 6 percent of the spot price of the gold. That's how he makes his money. Gold funds, ETFs and certificates can be bought online from your broker but these are strictly for investment. They have no value if the government collapses since gold is leveraged. They sell more paper than there is gold to back it up. In a crisis, if you tell them to send you your gold, they will be unable to do that. Also, in a crisis, there is no guarantee the mail will be working or your cell phone. That is why coins, silver or gold or bullion is good. You can put it in a safety deposit box if you trust banks. If you do not trust banks, then you can bury it in your cellar or plaster it into the wall or someplace safe. Keep in mind that if you are buying gold because you think the world is going to hell that you should also buy a gun. A gun will be more important than gold if the government collapses. In any event, gold is quite beautiful and seductive and once you start buying it you will want more and more. When you buy it, try not to handle it. Gold is soft and easily damaged. Make sure you buy coins in easily traded denominations, such as 1 troy oz (weight is troy or avoirdupois -- anyone selling metals in avoirdupois is screwing around). Make sure the coins you buy are .999 pure or better. Until recently the US was selling corrupt gold that was only .992 pure and no one outside the US would buy it. Take a look at all the coins and their weight and purity. I like the Canadian gold coins. People used to talk about Kruggerands but I don't like them -- they are an odd weight and I am not convinced of their purity. Don't buy older US gold. Don't buy Mexican coins, they are total crap. In any case, this is what I suggest, the rest is up to you.

How does a Fat Cat sell Gold before everyone else,...and not cause a run on the Bank's(everyone getting out of gold)

Use the convenient excuse that you need money for redemptions
for failures in your portfolio..Bull$ht..

http://www.thestreet.com/_yahoo/story/11…

Are you watching the Gold Index...(ETF) http://finance.yahoo.com/echarts?s=GLD#s…

It's hard to believe, but gold stocks are up 489% in the last three years. Gold is the best hedge against inflation and a declining dollar, and is a very secure investment. However, it's important to be diverse in your gold investment plan and not put all your eggs into one basket. Invest in a variety of plans. There are lots of ways to invest in gold, including these:

· Direct ownership
· Gold exchange-traded funds
· Gold mutual funds
· Junior gold stocks
· Gold options and futures
· Junior mining stocks
· Blue chip mining stocks
· Gold stock mutual funds
· Investment grade rare coins
· Raw gold (bullion or bars)

Learn more about investing in gold at this website:

Always invest in physical gold from a reputable gold and silver coins and bullion dealer. Here is a list of good once: http://inflation.us/reviews/
The exchange traded funds like GLD or SLV hold mostly derivatives and not real gold or silver so they could potentially blow up someday. If you want to buy a lot of gold coins or gold bars invest in a good safe at home. I personally would not want to store gold at a local bank.

There are a few possible ways to invest in gold: Gold ETF's, gold mining stocks, gold bullion, gold coins, and gold futures. There are a few other possibilities like call options on gold futures and ETF's and swaps on gold that are just not appropriate for new investors so are not discussed below.

There are a bunch of things to consider (but the answer is ETF's):

Carrying costs: ETF's will cost you about 1/2% per year in management fees. You could conceivably pack a safety deposit box with gold and pay less than that. Gold mining companies will not cost you any fees directly.

Tracking gold price: ETF's, futures, and physical gold will track gold exactly. Gold mining companies contain equity risk so they contain risk of how well the company is doing exploring and extracting gold as well as discount rates on future earnings. In terrible inflation, gold and gold ETF's would almsot certainly outperform gold miners.

Trading Costs: Physical gold trades at a 5% spread or so. ETF's and big gold mining stocks like Barrick and Newmont trade at much smaller spreads. Futures trade at very small spreads.

Taxes: Earnings on physical gold is taxed at higher rate than ETF's and gold miining stocks. If you are in the 28% marginal tax bracket or higher physical gold earnings are taxed at twice the rate of ETF's. Futures are taxed as 60% short-term gains and 40% long term gains so are ideal for trading gold.

Privacy: If you don't want someone to know about your holdings, bullion or coins in a safety deposit box is hard to beat.

Leverage: You can make an argument that investing in gold mining stocks can give you a leveraged investment in gold, in that the mining company has debt. It's hard to buy bullion using leverage. You can also use brokerage margin to buy gold ETF's and mining stocks at 2:1 leverage. The clear winner for leverage is futures which you can trade at 10:1 or so (I'm too lazy to look up margin requirements right now).

Short-term trading: If you are going to trade these short term, all three suck because you get short-term capital gains taxation. Futures contracts count 40% of the gains as long term even if you hold them for 5 minutes.

End of the world: If the governement shuts down leaving us in total anarchy, gold coins and bullion may be more valuable than paper claims on gold. The rate of appreciation on bottled water will be infinitely greater though.

For most real investors - ETF's are the way to go for direct exposure to gold. Gold stocks are the way to go for a hybrid gold/equity bet. Bullion in a safety deposit box for privacy. Futures contracts for leverage and short-term trading.

Investing online if you are smart about it is not risky. If you buy an ETF at eTrade, a futures contract at Interactive Brokers, or bullion at Apmex.com, I promise you that you will get exactly what you wanted to buy at a price reasonably like the market price (there are other fine places as well).

Edit: @Fred: "The exchange traded funds like GLD or SLV hold mostly derivatives and not real gold "
I will bet you $10,000 that this is not true (I'll actually extend this bet to anyone). Have you ever even glanced at the prospectus? GLD and SLV hold almost entirely bullion.

Edit: @Jay "the US once seized all gold (during the Great Depression) " No, that didn't really happen now did it? The govt made people sell their gold back to the government at the official gold rate. They prosecuted exactly one person for not doing it and that was unsuccessful. They did it to devalue the currency which was then tied to gold. Guess what? The currency isn't tied to goid anymore so the govt has no need to do this. The govt doesn't give a rat's *** if you own gold.

Gold bugs are absolutely the stupidest class of investors. There may be reasons for owning gold, but most of the idiocy you read on the Internet ain't it.