Home Buying Gold Where to buy gold
How to buy gold
The best way to buy gold is in the form of high karatage gold jewelry.
How not to buy goldExchange Traded FundsIt is possible to buy shares in a gold ETF called GOLD, which has the ticker symbol GLD. The shares are priced at the mid point between the buying and selling price of the spot price of gold. There are several disadvantages to this way of owning gold. Firstly while the expenses of the gold ETF are low, the Trust will have to sell part of its gold stores to pay these expenses. Thus, over time, the fractional amount of physical gold represented by each share will decrease. Indeed it is not clear how much, if any, gold the Trust actually possesses as it is never audited. Secondly, the tax treatment of GLD is unfavourable. In the US, exchange traded funds that invest in metals do not qualify for the 15% rate on long-term capital gains. Instead their top top tax rate is 28% as the fund's investors are deemed to own a share of the metal. The gain is treated as coming from the sale of a collectible. Futures and OptionsThe principle futures contracts are YG, YI, ZG GC and SI.You can also buy and sell options on these contracts. Derivatives are remarkable in that literally everyone without exception loses money on them: buyers, sellors, small retail investors and giant hedge funds and banks. Being an expert won't help much either. Myron Scholes and Robert C. Merton, who won the 'Nobel' prize for economics for their work in developing the Black-Scholes formula for pricing options, were on the board of directors of Long-Term Capital Management which lost 4.6 billion in less than 4 months dealing in options. There are more enjoyable ways of losing money. |