Hey Everyone! It's an exciting time! The
price of gold is hitting new
highs daily! As someone who has been buying gold since the $500 per ounce range, I'm thrilled
to see my investment rise in value! Is this rally over? I really don't think so! Now, as
mentioned in my 2010
gold price prediction,
I do see gold staying in the current range for a while. Why? The price has risen quickly and
the market needs to digest the move before the next big leg up to the $1,500 per ounce level.
One thing is very clear to me, however: The long term price trend of gold is up, way up!
© Stockphoto.com - BigLip
As the price of gold rises, I have been getting a lot of questions about buying physical gold
bullion coins and bars versus gold ETFs (gold exchange traded funds) such as GLD. Today,
I'd like to address that question because it's a very good one. It's a question I have
some very strong opinions about!
Gold ETFs are More Accessible Than Physical Gold (Gold ETF Pro)
As the price of gold rises, it's becoming increasingly difficult to purchase gold coins for
smaller investors. Why? First and foremost, the price of gold has skyrocketed. The price of a
one ounce gold round is quite expensive, currently in the $1,300 range (due to dealer markup).
Even fractional gold coins such
as the tenth ounce panda are
expensive due to dealer markup (currently in the $150-$180 range). What is a smaller investor
to do? Well, one option is investing in shares of gold ETFs (or exchange traded funds).
The most popular gold ETF out there is
GLD (SPDR Gold Trust). The current price per
share of the GLD ETF is only $124 per share. If you're a small investor like myself, you
can buy one share of the GLD ETF for only $124 plus $7 commission if you use a discount broker
like Scottrade! How cool is that? Another benefit: Since GLD is a huge $48 billion dollar fund,
the markup between the spot price of gold and the price per share is low compared to dealer
markup on physical gold. In other words, GLD can take thinner margins due to scale.
What Happens In An Emergency? (Gold Exchanged Traded Fund Con)
Most of us buying gold coins are practical folks. We're hoping for the best but also planning
for the worst. What if disaster strikes? Will it be easy to get your physical gold out of
GLD?I don't really think so! GLD is unallocated paper that says they are storing gold
on your behalf. However, I don't think there's a easy mechanism to ever redeem that gold.
Moreover, GLD is an unallocated fund meaning your gold is mixed in there with everyone
else's. There's no spot in the vault that's reserved just for your gold (as would be the case
with allocated gold storage). It's this very reason that I'm a huge fan of physical gold
bullion coins and recommend always weighting more of your gold portfolio in physical gold
bullion than gold exchange traded funds.
On the topic of emergencies, I will say however that it's great to diversify! The problem with an
emergency is you can prepare but you never know what will happen. The best way to prepare, in my
opinion, is to own gold and silver in multiple different ways. The GLD exchange traded fund offers
yet another way to diversify and own gold. You may want to check out my article about
gold confiscation to learn more about
exchange traded funds as a method of diversification.
Physical Gold Coins Are Small and Portable (Physical Gold Coins Pro)
Gold coins and small gold bars such as
Johnson Matthey Gold Bars
offer the ultimate leverage! A very small amount of gold contains tremendous wealth.
In fact, you can store a lifetime's worth of wealth in your pocket with gold. It's very easy
to store gold in a safe deposit box.
Moreover, you can choose to hide gold
(just a little) around the house. Physical gold bullion is small and portable enough to make
this easy. The best part of all of this? You can easily take your gold with you if emergency
strikes. If not, it will at the very least be super easy to pass your gold down from generation
Exchange Traded Funds Rock, In The Case of Silver (Silver ETF Pro)
As you can see, I'm a big fan of physical gold coins. Even though the markup exists, I always
recommend starting out with physical gold and keeping it as a large position within your gold
portfolio. Nonetheless, gold ETFs do have their place and can be a great compliment to any
gold portfolio. In terms of percentages, I would recommend having 75 percent (or more) of your
gold in physical bullion and about 25 percent (or less) in ETFs.
However, let's shift gears a bit and look at silver. I'm also a huge fan of silver bullion coins
and bars. I love silver art bars and
just did a silver art bar video.
I also love tubes of silver eagles.
However, one thing becomes very clear very fast when you build out your silver bullion collection:
It takes up a lot of space! For this very reason, silver exchange traded funds
(such as SLV, iShares Silver Trust) are an
excellent choice! It's not so easy to hide silver. It's not so easy to put silver in your safe
deposit box. Owning some shares of SLV, however, takes up no space at all. For this reason, I
tend to recommend ETFs a lot more in the case of silver.
While we're on the topic, I want to draw your attention to two more articles I wrote a while back
about gold mining company stocks. If you're thinking of buying GLD and SLV, you're probably
also thinking about gold stocks. My first article talks about why you
should not buy gold stocks.
The second article talks about why you should
buy gold stocks.
I hope you find these helpful! So, you may be wondering where to buy gold coins? There are many great
options but I must say I have been having a lot of success with
Buy Gold Coins on eBay
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