I told you recently that I've been buying more American Gold Eagles, and a lot of you asked for specifics.
I'm happy to elaborate.
There are a number of ways to own gold. The best way is to own physical gold, and I like gold coins, which can be purchased from a number of reputable dealers.
The dealers I like personally are Kitco, Blanchard, and JM Bullion. These firms offer a wide variety of newly minted coins, historical coins, and rare coins, as well as coins from different countries, such as American Gold Eagles, which are my favorite, South African Krugerrands, and Canadian Maple Leafs. You can choose from different weights, ranging from 1 ounce down to 1/10th ounce (and Kitco even offers 1/20th ounce).
They have great service, too. Buying gold coins is as easy as buying a book on Amazon.com. You can have your gold in hand in a few days. JM Bullion offers free shipping, while Kitco has a flat rate. Kitco is the only one that will ship gold internationally, so be aware of that.
Now let's talk about prices...
They all offer good prices. You can judge that based on the percentage markup over the spot price of gold. You can get discounts for buying in bulk or paying with cash. There are occasional sales and special offers (including this week on Black Friday). Kitco looks to have the best prices right now.
You can pay for your coins with credit cards at both Blanchard and JM Bullion, and JM Bullion has the added advantage of taking payment via PayPal, although it charges a higher price for coins paid for that way. With Kitco, you'll open an account and fund it via bank wire, money order, or personal check.
| Lowest Price for 1-oz Gold Coin (11/23/15) | Markup Over Spot (11/23/15) | Payment Options | Shipping | Ships Internationally? | |
| Kitco | $1,106.00 | 3.63% | Wire, check, money order | Flat rate | Yes |
| Blanchard | $1,109.25 | 3.93% | Wire, check, credit card | Free | No |
| JM Bullion | $1,109.40 | 3.94% | Wire, check, credit card, PayPal | Free | No |
Just to be clear, I am recommending these three because I like them and feel you will like doing business with them too. I do not receive any kind of compensation for naming them here.
If You Don't Want to Own Gold Coins...
For some people, it's impractical to own physical gold.
There are also a variety of ways to buy gold through exchange-traded funds (ETFs) or closed-end funds, including the SPDR Gold ETF (NYSE Arca: GLD), which charges a 0.40% fee, and the iShares Gold Trust (NYSE Arca: IAU), which charges a 0.25% fee. There are also two other stocks that I prefer, the Central Fund of Canada Ltd. (NYSEMKT: CEF) and the Sprott Physical Gold Trust (NYSE Arca: PHYS). PHYS is a big shareholder in CEF and is currently waging a war on CEF's corporate governance practices up in Canada, where both are located. CEF is a closed-end fund that owns about two-thirds of its assets in gold and one-third in silver and can often be bought at a discount to the spot price of gold and silver (it owns both), which is why I like it. Recently it was trading at nearly a 12% discount to net asset value. PHYS charges a 0.35% management fee and a 0.07% administration fee. U.S. individuals can elect long-term capital gains treatment on units held for more than one year.
By the way, I still do not recommend investing in gold mining shares. While they offer indirect exposure to gold, they also offer all of the headaches of investing in an operating company. Mining companies are as often a highly leveraged play on gold as a highly diluted play on their primary product. If you want to invest in gold, invest in gold.
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In terms of allocation, I recommend that all investors allocate 15% to 20% of their portfolio to gold, whether physical or in a fund.
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About the Author
Prominent money manager. Has built top-ranked credit and hedge funds, managed billions for institutional and high-net-worth clients. 29-year career.