5 Big Mistakes Investors Make When Buying Gold Javascript must be enabled to use this site. Please enable Javascript in your browser and try again. × Search search POPULAR SEARCHES SUGGESTED LINKS Join AARP for just $9 per year when you sign up for a 5-year term. Get instant access to members-only products and hundreds of discounts, a free second membership, and a subscription to AARP the Magazine. Leaving AARP.org Website You are now leaving AARP.org and going to a website that is not operated by AARP. A different privacy policy and terms of service will apply.

5 Worst Mistakes When Buying Gold

How to make sure you get the quality and quan tity you want at a fair price

E+ / Getty Images 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 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 $1,89 1 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. Get instant access to members-only products and hundreds of discounts, a free second membership, and a subscription to AARP the Magazine. 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 . 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 , 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. AARP Membership — $12 for your first year when you sign up for Automatic Renewal Get instant access to members-only products and hundreds of discounts, a free second membership, and a subscription to AARP the Magazine. may be about right, according to financial planners, but probably no more.

2 Overpaying

Entertainment $3 off popcorn and soft drink combos See more Entertainment offers > One of the biggest ways to take advantage of novice investors is to charge a big difference between the wholesale, or spot, price of gold — the price dealers pay — and the retail price. You can find the spot price online at many financial websites: Yahoo Finance and Kitco.com are two good places. On average, you should , according to precious metals dealer Kitco. Find a different dealer if you’re asked to pay more than that, and don’t get lured in by pitches for “special deals” from private mints.

3 Loading up on rare coins

Unless you love rare coins for their beauty and you’re extremely familiar with the market, stick with authentic bullion coins issued by the government. Rare coins can be hard to value and hard to sell. In addition, they can sometimes cost much more than their so-called melt value, which is their worth based on weight and purity if the coins were to be melted down. If you buy well-known government-issued gold coins, such as , you’ll know exactly what you’re getting — and you can sell them easily through coin dealers. Although the U.S. Mint does not sell American Eagles directly to the public, you can find a list of dealers on the .

4 Hiring the wrong storage company

From a fraudster’s point of view, the ideal gold scam is to have someone send you money for gold you don’t have and never have to deliver. Many reputable companies will store your gold properly and securely, but if you decide to have someone store the gold for you, investigate the organization closely. Look for a company with a long operating history, Rotunda says, and check their record with the Better Business Bureau. You can also call your , who can tell you whether the company has had any regulatory problems. AARP Membership — $12 for your first year when you sign up for Automatic Renewal Get instant access to members-only products and hundreds of discounts, a free second membership, and a subscription to AARP the Magazine. are backed by physical gold held in vaults, but some rely instead on futures contracts to track the price of gold. Read the prospectus to understand how the gold ETF you’re thinking about investing in operates. ETFs are convenient because you can buy and sell shares at any time during the trading day, and you don’t have to figure out where to store your gold. You will pay an ongoing fee for the ETF’s services, and you may have to pay a brokerage commission to buy it, but remember, you would also pay commissions to buy physical gold and fees to store it. Be aware that some gold funds invest in gold mining stocks and not the metal itself. Again, always read the prospectus before investing. The prices of mining stocks can be far more volatile than the price of gold itself. John Waggoner covers all things financial for AARP, from budgeting and taxes to retirement planning and Social Security. Previously he was a reporter for Kiplinger's Personal Finance and USA Today and has written books on investing and the 2008 financial crisis. Waggoner's USA Today investing column ran in dozens of newspapers for 25 years. More on money AARP Membership — $12 for your first year when you sign up for Automatic Renewal Get instant access to members-only products and hundreds of discounts, a free second membership, and a subscription to AARP the Magazine. AARP VALUE & MEMBER BENEFITS See more Health & Wellness offers > See more Flights & Vacation Packages offers > See more Finances offers > See more Health & Wellness offers > SAVE MONEY WITH THESE LIMITED-TIME OFFERS