Gold has been prized for both its monetary value and its beauty for centuries. The yellow metal is also prized for its scarcity: All the gold in the world would form a cube roughly 90 feet high, according to the U.S. Geological Service
And, as inflation has soared to 40-year highs, gold is also being touted as a hedge to stay ahead of rising prices. It’s up 16.2 percent in value since the end of March 2021, compared to the 8.5 percent overall inflation rate for the same period. It’s no wonder that gold, which was selling for $1,891 an ounce on April 28, has become a hot commodity. The U.S. Mint sold 140,000 one-ounce American Eagle gold coins in March, compared with 55,000 in March 2021.
But investing in physical gold has two big problems: how to buy it and where to store it. When you buy gold, you must make sure it really is gold, not painted lead, and that it’s the correct purity, as measured in carats (24-carat gold is pure gold; 18-carat gold is 75 percent gold). For that reason alone, the gold market has been rife with fraud. Mark Twain supposedly said that a gold mine was a hole in the ground with a liar standing next to it.
Once you have your gold, you have to figure out where to store it. If you keep it at home, a thief could walk away with your investment. If you put it in a bank safe-deposit box, you’ll have to buy additional insurance, because those boxes aren’t covered by federal deposit insurance. And if you have someone else store it, you’ll need to pay them for the service and make sure they are a legitimate business, not some guy with a very lucrative P.O. box.
When you buy gold, then, you have to be sure you’re getting gold, and you may also have to hire someone to protect it. Plus, throughout the transaction there are plenty of ways to spend more than you should — or get taken entirely. Here are some of the worst mistakes people make when buying gold, and advice on how to avoid making them.