You might have the idea that every gold investor rents a 10 ft. vault, filling it to the brim with blocks of gold and priceless jewelry. Scrooge McDuck might do this from time to time, but in real life it doesn’t happen too often. You can save and invest in gold and silver at a much earlier age than you think. We’ll show you how the “room filled with 400 oz gold ingots” is more of a Hollywood scenario than a reality. And that’s a big plus. When it comes to how much do I need to invest in gold, knowing that you can keep a lot of wealth in a small physical quantity of gold means you don't need to worry as much about storage.
Gold investing isn’t just for the 1%
Though it might seem like gold investment is only for the 1% percent, the truth is that it’s affordable for anyone with a little savings at their disposal. Gold bars are one of the most affordable way to invest in gold. Unlike gold coins – slightly limited in size and are more expensive per ounce – gold bars are broken down into cost-effective segments.
That fits right in line with investment strategy from Stanley Drukenmiller, the multi-billion dollar hedge fund investor who suggests you should “get out of the stock market” and invest in gold. It has worked for him, and it can work for you!
Yet, the cheaper price of gold bars does not rule out gold coins. Especially for first-time bullion investors, gold coins offer a versatile fractional solution. You can find several 1/10 oz gold coins from mints such as the Royal Canadian mint going for under $150 USD!
Benefits of Smaller Gold Bars and Coins
The ability to invest in small gold bars and coins comes with many additional benefits for the smaller investor. In the first place, you can always trade 1 gram gold bars for bigger pieces of bullion.
Many people start investing in precious metals by buying silver, and then selling some of that silver and turning it to gold. Recently, a number of people have suggested that silver may now a better investment than gold. However you allocate your portfolio, more options are always helpful.
The flipside of buying smaller gold bars and coins is that you will pay more for the extra work involved in making them, as opposed to large bars. Novice investors often wonder why the spot price is not the actual price they pay for gold. Spot prices fluctuate by the second and are based on recent inter-bank trades and futures.
They do not include manufacture, packaging, shipping, and insurance to get those bars to you. Just remember that when the big banks trade metal, they are trading numbers on computer screens and no metal actually moves.
Other factors include the volume (i.e. the sheer weight of gold being manufactured and shipped) or numismatic value (rarity, mostly pertaining to coinage). However, numismatic value can add significantly to a coin’s value. That’s something you don’t get with bars. While it’s unlikely that a 1/10 oz Gold Eagle or a 1/4 oz gold Maple Leaf will soar in value, certain investments in rarer coins have gone up tremendously.
Numismatics and How Much I need to Invest in Gold
Most investors don’t regularly buy numismatics over gold or silver bullion, but at a reasonable price you are investing in rarity – and rarity is an intangible that will grow in value as time passes.
The second benefit of investing in small gold bars is that you’re not paying for storage or taking risks of theft. Turns out Scrooge McDuck may have had some truth to him. At time of writing, you can easily fit just under $1,300 USD in your phone case.
While you might dream of one-day filling a 10 ft. vault with ancient Egyptian gold jewelry, for the time being you can store the bar someplace safe in your home.
Other Affordable Options?
Of course, owning a solid hunk of gold is far from your only investment option. As Dan Kaplinger points out, you can also invest in gold exchange-traded funds, futures contracts, mining contracts, or even put your hard earned money into gold streaming companies. With that in mind, you don’t own the real thing.
You really own proxies that derive value from gold. Still, these present alternative answers to how much you need to invest in gold and deserve some research to see if they make sense for you.
The Real Thing Always Wins Out
I know what you are thinking. There’s something nice about owning real gold or even silver. The thought of holding a gold bar, no matter how small, is a lot more satisfying than intangible numbers on a computer screen.
Why not own the real thing if you can, right? When all’s said and done you could put $20 USD and trading commissions into mining company stocks. Or you could put $40 USD into a bar of gold and enjoy it’s stability from a traditional investment point of view.
At least that is what Olivier Garret thinks. Olivier highlights many of the risks inherent in ETFs, and advices investors to own the real thing.
Why? Oliver lists all the benefits of buying gold:
- Liquid
- Portable
- Divisible
- Durable
- Consistent
- Convenient
- Value Dense
- Private and Confidential
You don’t need much to invest in gold
Start smart and build strategically and you’ll be building your own little Fort Knox in no time. The best way to invest in gold is to look at the long-term. Make a plan of where you want to be in 5, 10, 15, and 20 years. Starting off small with a few grams of gold is a great way to begin building that vault full of gold you’ve always dreamed of.