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by TIM STAHL

The role of gold bullion in ones portfolio is that of insurance. Stocks, bonds, and paper money all can and have numerous times been reduced to zero value, sometimes quite rapidly. Gold, in the form of bullion coins or bars has stood the test of time. For thousands of years it has always maintained a value in the marketplace. Even better in those times when paper assets are eroding the fastest gold tends to rise in value as investors seek safe havens for their wealth.

Here are some simple rules for wisely investing in gold bullion.

1. Never use borrowed money (leverage) to buy gold bullion. Gold will rise and fall with markets (though it never goes to zero), if you have leveraged to purchase you could lose all your money in your investment. If you purchase gold bullion with your savings it will be there when you need it.

2. Take possession of your gold bullion. Do not buy from a company that stores it for you or gives you a paper receipt for your gold. Companies do go out of business, you do not want to be just one more claimant in a bankruptcy proceeding.

3. Do not trade your gold bullion. It is tempting to trade and take a profit if the value of your gold portfolio rises. If you do you may not be able later to buy back into gold or may be without gold when paper assets crash and you need bullion the most.

4. Buy what is most actively traded. Buy gold bullion coins or bars that are readily recognized in the marketplace. This would include American gold eagles, Canadien maple leafs, and South African Krugerrands. These coins are widely known and will be readily marketed in a crisis. Buying numismatics (collectable coins) and unknown bullion coins should only be done by educated collectors. If you have the interest to educate yourself in this way go ahead and enjoy it, just do not make this your gold portfolio, rather keep it as a hobby.

5. Buy from a local coin shop or dealer at a coin show if you are buying in small quantities. Ask for the principal of the company and spend some time getting to know them. Work on building a relationship if you plan on continuing purchases of gold bullion coins. Local coinsellers who have been in business for many years have done so by earning the trust of their customers. They also understand the market and will gladly answer your questions. eBay is another place where gold bullion can be purchased in small quantities. eBay transactions through Paypal are insured so this is now a safe way of gold investing. Take some time to check out the sellers feedback ratings and be sure you know exactly what is being sold before making a purchase. (and only pay through Paypal to ensure your buying safety)

6. If buying large quantities call around to different dealers for price quotes, you may save a significant amount of money by doing so. However perform due diligence on any seller before completing your purchase.

These are simple rules, but by following them you will maximize the security of your gold portfolio.

by Tim Stahl Besides being a small time gold investor the author maintains the websites Gold Coins To Buy and Gold Bullion Site