Hi all, I need some advice for a friend. My friend is not a trader, he is retired and is thinking about dipping his toe in the Gold market by buying to begin with 1 Krugerrand via some online firm. He told me that on Friday the company would sell him one for £1050. I asked about selling charges etc and he said that if he bought and sold within a few seconds (just to illustrate the point) and the spot Gold price had not changed he would be charged 2% of the spot Gold price at the time of selling. So if God was $1500 when he sold he would lose 2% or $30.
I have no experience of buying Gold so what advice would you give him as to the best low risk way to have some exposure to Gold. On the surface to tie up £1050 as a first trade/investment to me is to risky when you have no trading experience at all. And who knows where Gold will go, maybe still go on climbing or maybe its peaked, I sure don't know. Regardless of crystal ball speculating I worry that if Gold had even a slight correction and my fried saw a few £100's wiped off his Krugerrand value he may find the psychological stress too much. On Friday he was relaying to me even slight fluctuations in the spot price.
I grew up buying and selling gold coins working in my parents' coin shop. My advice is to find a good small local coin dealer who doesn't charge sales tax if you pay cash. Depending on where you live, that 5 - 8% sales tax (on top of the dealer's spread) will really hurt your gains.
As for coins, I personally like the Canadian Maple Leaf because it is 99.99% pure. Like sharky said, either that or the American Gold Eagle are nice. However, both of them have higher premiums (over spot price) than the Krugerrand.
If you can't find any good local dealers, kitco or apmex are both good online dealers, and if you can meet the minimum order size (and live in USA), tulving is even cheaper.