Buying Gold? Here’s What You Need to Know

Recent news reports have brought to light the prevalence of gold scam syndicates that are defrauding Kenyans of millions of shillings. They are taking advantage of the unsuspecting buyers’ ignorance of the precious metals business and their preference for underhand dealings to avoid taxation. Therefore, it is imperative that every Kenyan know the important facts that go into gold acquisition.

The Merriam-Webster dictionary describes gold as a yellow malleable ductile metallic element that occurs chiefly free or in a few minerals and is used especially in coins, jewelry, and dentures. From recorded history, we see gold being used as a symbol of wealth all around the world.

Ancient civilizations considered it a manifestation of their power and status due to its beauty and scarcity. Some products crafted from gold included jewelry, ornaments and early forms of money.

Over the years, the same fascination with gold has remained strong. Despite monetary systems no longer being tied to the precious metal, it is still viewed as a “safe haven” investment, an excellent hedge against inflation and an ideal investment option.

As an investment option, it has specific and useful qualities that contribute to its value during uncertain economic times and profitability during robust economic times. They include:

• Production expense. Extraction and development is hard, costly and risky. Therefore, it is difficult to find and dig up. This leads to high demand against its short supply.
• Rarity. Data from the commodities industry shows that gold comprises only five parts per billion of the earth’s crust. This makes hard to locate and extract.
• Numerous uses. It can be smelted and then turned into different items including coins, bracelets, rings, and other valuable products.
• Hard to diminish. It retains its quality and is resistant to decay.

Buying Gold Directly

The first step is knowing the right time to strike. It would be better to exercise patience while keeping a close eye on the markets. Similar to the stocks and funds, its value is derived from buying low and selling high. Generally, gold prices are lower when the stock market is high and economic indicators are pointing north.

This is due to its lower demand when both the economy and stock market are performing at peak condition. Gold tends to be a “go to” commodity when things start going south economically, so it is important to buy immediately the stock market starts declining – not later.

It is also important to know how it is priced before a direct purchase.

With gold being a volatile commodity, prices bounce up and down regularly. Make sure you check the “spot price”, which is a reflection of the average bid price on gold, as cited on global gold exchanges.

It can change substantially with the occurrence of global events such as military conflicts, recessions, economic forecasts, good or bad.

Tips for Buying Gold

Buying the precious metal is not always easy and therefore it is important to do extensive research in order to get the best possible deal. Here are some tips to get you started:

1. Look around for a good price

The first step before a purchase is knowing the current price per gram. You can do this on by casting a wide net on multiple trustworthy websites to be aware of the price comparisons. A good place to start is visiting dealer websites as well as gold exchanges, which are also found online.

2. Purity levels

Gold comes in different levels of purity which can affect its price. For instance, the purest form is 24K (or 100%) gold. However, the price of gold also varies depending on the alloy it is mixed with. For example, 22K gold is 91.6% gold as it consists of 22 parts gold and 2 parts alloy. It is important to determine the type of gold you want and the different rates available on the basis of purity levels.

3. Credible dealers

It is very important to find a licensed gold dealer. Whether you are buying gold for personal use or investments purposes, make sure you buy only after confirming the credibility of the dealer. Avoid dealers offering huge discounts and ask to see the whole consignment you want to buy before purchase.

4. Genuine certification

Buy gold that has a certificate indicating that it has been tested. The best way to do this is to get the test done in the presence of the seller before buying.

Conclusion

As stated above, there are various ways to purchase gold. However, just as with any investment, diligence and preparation are important things to take into account before putting your money on the line. With its availability from numerous sources, it is best to ensure you buy from a credible source, to make sure it is a genuine product.