When buying gold and silver there are many pitfalls to avoid before spending your hard earned money. I've compiled a list of the TEN BEST gold investing tips for new investors who want to get the most value for their money.
Spot Price: The price that is quoted if you want to buy any commodity today.1) The first tip, and I believe the most important tip before buying your gold is to shop around. It might sound obvious, but there are many new gold
investors out there who get emotional about buying gold and they settle for the first place they find online.
Do your research before buying because it could cost you thousands of dollars if you make a mistake.
2) Never buy numismatic gold coins unless you are a collector. Numismatic coins are collector's coins and they carry a large premium over the spot price of gold. Numismatics include extremely rare coins, graded coins, shipwreck coins, etc. Remember, you are investing in a commodity (gold) so you want the most gold for the money.
The first time I heard the word " numismatic" I was taken back. It is just a fancy way of saying that the coin carries some kind of rare or distinguishable quality. A one ounce numismatic gold coin may fetch twice as much or 100 times as much than the gold content itself.
3) Only buy bullion coins and bullion bars. Gold and silver bullion simply means it is produced in mass quantities. Gold bullion is 99.9% pure gold and comes as government minted coins, rounds, ingots, and bars.
Buy gold bullion because the premium that it carries over the spot price is minimal. For example, the gold price today is about $1,100/ounce. If you were to buy a numismatic gold coin it might cost between $200 and $100,000 over spot price.
A bullion coin like the American Gold Eagle might be $35 over the spot price. A much better deal.(US Coin- $1 face value) (Silver Round)
4) 
Compare the different gold bullion products. Usually gold bullion that is minted by government mints like the Perth, Australia mint or U.S. mint carry a higher premium than gold rounds. Gold rounds are not considered coins because they are not legal tender. They do not have a face value on them like a U.S. gold coin does. These rounds are usually cheaper to buy.
5) Steer clear of fool's gold. Fool's gold is terminology used by many to describe the gold ETFs (Exchange Traded Funds). GLD is one such fund that can be invested in through your broker. The problem with these ETFs is that you do not physically own the gold your are investing in. The ETFs are derivatives so you are only getting exposure to the price of gold. The GLD is widely thought to not have the gold that they claim they have because they will not allow a third party audit of the stored gold.
6) Be weary of the gold futures contracts traded on the COMEX (Commodities Exchange). These are simply futures contracts to buy 100oz of gold or 5,000oz of silver per contract. When the future date arrives and the gold price has gone up, you make a profit.
The COMEX too has been under scrutiny for supposedly defaulting on gold delivery to customers. People are also claiming the the COMEX is using cash settlements in place of physical delivery of the gold to their customers. Technically, this is considered a default. It's probably not a good idea to invest here.
7) Diversify your physical holdings. Just like any investment portfolio you want to buy different kinds of gold. Don't just put all of your money into American Gold Eagles. It's a good idea to diversify because you never know which coins might carry a much higher premium when you go to sell them.
8) Buy different denominations of gold coins. You can purchase most gold coins in 1/10 ounce, ¼ ounce, ½ ounce, and 1 ounce. Some coins are even minted in 10 oz or higher. It's important to remember that the smaller coins carry a higher premium just do to the fact that it took more time and energy to mint.
9) Beware of putting your gold into bank lock boxes. It's better to find a place to hide your gold that nobody else knows about than to trust that a bank will let you get your gold out in the event of a bank run. Another option is a super heavy safe that is bolted to the ground.
10) Never tell anyone that you are investing in gold. If the time comes when the gold price goes bananas, which is what many economists are expecting to happen sooner than later, you want to make sure that your investment stays unknown to possible thiefs.
Government Issued CoinsThese include coins that are minted
specifically by governments. They include
coins like the Gold American Eagles,
Canadian Maple Leafs, Austrian
Philharmonics, and South African
Krugerrands. These
coins are considered
bullion coins which
means they are 99.9% pure gold and produced in mass.
Each of these coins has a face value on them. For example, the American Eagles have face values of $5, $10, $25, and $50.
The face values mean nothing and are just there to show that the coins are legal tender. In other words, a one ounce gold coin will always be redeemable for $50. I say the
face value means nothing because it
drastically undervalues the actual price of
the coin.
1. They are 99.9% pure.
2. They carry a low premium.
3. They are recognizable around the world.
Bullion coins, like the Gold American Eagle, are a good choice for investors. There are, however, bullion rounds on the market that may offer an even better deal than the coins. Coins vs. rounds: what’s the difference? Coins are minted by the government, whereas rounds are minted by governments and independent companies. Many mining companies will mint their own rounds with their company name on the round. Rounds should be on the top of your list because they are 99.9% pure gold, and they do not carry the premium that government coins carry.
Bullion Bars/IngotsBullion bars (a.k.a. ingots) will give you the most gold for your money. Why? Well, because you are buying in bulk of course, and with everything bulk you get a discount. You can buy gold bars for considerably less than bullion coins or rounds.
Gold Mining Stocks
There is such a premium on coins and rounds because it’s more labor intensive to produce. The bars are simply poured and stamped with 99.9% pure gold. That’s it. The only problem with bars is that most people cannot afford to buy gold in bulk amounts. This may not be the best choice for most people.
There are choices when it comes to mining stocks. By far the highest profits are taken in the junior mining stocks. These stocks usually trade around $.10-$3.00 and can be risky, but the payout is huge. These stocks are referred to as penny stocks since they trade for very cheap.
DiversifyI don’t think that gold is any different than any other investment. You need to diversify your gold holdings. I wouldn’t just buy only American Gold Eagles. I would buy some other coins or rounds.
Jewelry as an InvestmentMost people would not invest in jewelry due to many factors.
1. It’s too expensive for the amount of gold you get.
2. It’s not easily divisible into units.
3. The jewelry is not pure gold. Most of the time it is 14K gold.
In India, jewelry is the main avenue for which people invest in gold. It is just not the most economical way to go about investing.
StorageThere are companies here and overseas who will store your gold for a small fee. Many
people are not comfortable with storing gold in their home or at a bank. Letting somebody else store and protect your gold is a great investment strategy.
BullionVault.com is a company that you can buy gold through, and they will store it in one of three locations of your choosing. They have large storage vaults located in New York, London, or Zurich. They will start you off with a FREE gram of gold!
I would avoid keeping your gold in a bank lock box. During the 1930’s when the government confiscated gold, the first place they went were the bank lock boxes.
Not that gold confiscation would happen again, mainly because we are off the gold standard, but it is just better not to keep it at any bank.