We've entered a bear market. Stocks fell 20% from recent highs. And it seems the markets get more uncertain with each day COVID-19 is around. That's what makes buying gold essential right now.
The spread of the coronavirus is called a "black swan event." It's the word for an unpredictable scenario that creates a more erratic market than normal.
Well, the gloom of a word like "black swan" isn't lost on anybody right now. The CBOE Volatility Index (VIX) is up above 60.
For perspective, the VIX has barely broken 30 in the last 10 years.
What this means is, unfortunately, most people don't know what's going on. Or what's going to happen.
But let's not forget, even in times like these, there is a right way to handle your money.
The more uncertain things get, the more you'll want to look toward safe-haven assets like gold, silver, or bonds to hedge your losses as the stock market tanks.
Gold is known to have held its value longer than almost any other asset in history. People trust that it will maintain its value over time.
And if there's any silver - or gold - lining in this situation, investing in gold has never been easier.
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Let's take a look at a few different ways to invest in gold. Then, we'll tell you the best way to invest in gold in today's bear market.
Gold Coins, Gold Bars, & Other Physical Gold
If you're looking for maximum security in your gold investment, you can't go wrong with holding the physical metal itself.
This is actually the oldest form of ownership. Some cultures still keep their entire savings in physical gold.
With the physical commodity, you avoid the credit risk associated with holding a contract.
One downside, however, is that you may have to spend hundreds or thousands of dollars on a safe, insurance, shipping costs, dealer fees, and more.
Still, if you're interested in nothing other than holding gold with your bare hands, here's how you can do it. And after that, we'll show you an arguably more efficient way for you to invest in gold.
How to Buy Physical Gold
You can buy gold coins called American Eagles or American Buffalos. Eagles come in different sizes, while Buffalos are all 1 oz. and can be used as legal tender ($50 per coin).
If legal tender is not what you're looking for, you can purchase entire bars ranging from 1 oz. to more than 100 oz.
Coins and bars can be purchased from the U.S. Mint or from private exchanges. But these tend to have high markups over the spot price. That's why we recommend going straight to the bullion dealer.
We have a list of four reputable bullion dealers right here.
As an alternative to holding the physical product, you can invest in a pool or certificate. You're with a group of other investors to invest in gold more cheaply.
But this also carries more risk than holding the commodity itself. It goes back to trusting your money in someone else's vault. The bullion bank housing the gold pool may or may not go under, in which case you lose your stake.
A certificate could be less risky. You can invest in a Perth Mint Certificate with at least $10,000. This can be based in gold housed internationally, a good way to diversify.
If you're not interested in holding physical gold, you have a couple other options.
You could, in theory, purchase a futures contract, which would promise the delivery of gold at a specific agreed-upon price. With this, if the price of gold increases, the value of the contract increases.
The risk, however, is that gold could decline, and so with the value of your contract. The other risk is that your futures contract expires before you get to flip it, and you have to foot the agreed-upon bill.
There's a much easier way to invest in gold from a distance, however. No wheelbarrow required. No safe. And you can own it today...
The Easiest, Safest Way to Buy Gold Right Now
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About the Author
Mike Stenger, Associate Editor for Money Morning at Money Map Press, graduated from the Perdue School of Business at Salisbury University. He has combined his degree in Economics with an interest in emerging technologies by finding where tech and finance overlap. Today, he studies the cybersecurity sector, AI, streaming, and the Cloud.
I’m glad I stumbled across this article today. I was about to buy some gold for my wife from a pawn shop. This knowledge has helped me tremendously. Thanks!