How to get filthy rich buying gold

IT'S possible to buy an actual bar of gold. And now is the time to do it. Here's how ordinary people are making money buying gold.

Anyone can invest in precious metals. Picture: AP

GO FOR gold and get richer faster.

That's the message from ABC Bullion who say investing in precious metals could double your money in half the time it will take to earn the same amount in an interest earning savings account.

And if you ask precious metal experts they will also says now is a golden time to start investing.

According to ABC Bullion Chief Economist Jordan Eliseo there's never been a better time for the average Aussie to start cashing in on gold.

He admitted while the price of gold could be volatile, historically low interest rates, high cost of mortgages and a rise in the precious metal price meant investors had a much greater chance of getting rich faster than ever before.

Mr Eliseo said gold prices have gone from under $500 to over $1500 in Australian dollar terms, up over nine per cent per annum on average since the turn of the century.

Still following on what this means for your hip pocket?

"This means a $100k investment would be now be worth $338,000," he said.

"This is much better than anyone saving in a bank account as the annual one year term deposit rate over that period has averaged under five per cent, meaning any Australian leaving their money in a bank would now only have $192k, nearly $150k less than those that have gone for gold."

In other words, if gold prices continue to appreciate, and cash rates stay low, Australians will end up more cashed up if they save in gold.

Sounds easy enough right?

According to Mr Eliseo, absolutely anyone can buy gold and silver and "it's more accessible than most people think".

Anyone can invest in precious metals. Picture: AP

"Some clients are regular buyers of individual silver coins, which can be bought for around $30, while other clients buy 1kg gold bars, which currently cost around $50,000," he said.

And he maintains based on the current long-term growth rate someone investing $20,000 has the potential to more than double their money to $48,533 in a decade, while someone investing $100,000 would be sitting on $242,666.

This is compared to $29,747 and $148,737 for the same amounts respectively if you were to invest it in a fixed-term deposit based on today's rates.

"While anyone with a mortgage benefits from lower rates, savers or younger Australians who might be saving for a house deposit are punished, as the interest rates they are getting paid on their savings are constantly reduced," he said.

"This is particularly relevant today when the Reserve Bank has already cut rates to an all time low of 2.50 per cent, with further potential cuts highly likely in the coming year."

Financial adviser Joseph Bylhouwer agreed gold could be a solid investment, but that it should be seen as one element in a well-diversified portfolio.

"In 1971, when the US left the gold standard, gold was priced at $US35 per ounce," he told news.com.au

"Today, it is valued at $US1,423, gold. That is an increase of nearly 41 times or provided a cumulative return of 9.22 per cent pa. Basically better than the stock market over the same period."

However the Total Financial Solutions adviser warned investing in gold wasn't without its problems.

He said this included holding costs to owning gold, which could include the expense of insuring and protecting it from theft, that it can be costly to buy and sell, and was harder to trade than other assets.

He also said it can be difficult to sell in small quantities and bullion companies could charge up to a 10 per cent premium to buy and sell gold holdings.

"You can still lose holding gold," he said. "Gold hit a peak of $US1,900.30 in 2011. It is now $US1,423.

"When the market thinks inflation is likely to take off then gold increases in value. When inflation is seen as being under control gold moves backwards."

Gold appears to be rising in popularity with some investors.

Michelle Hutchison, spokeswoman at comparison website finder.com.au, said it wasn't surprising to hear gold was rising in popularity while interest rates have been falling.

But she maintained there were still several advantages to keeping cash in the bank and savers needed to shop around for the best deal.

"Firstly, the biggest benefit of at-call savings accounts is that you can access your money whenever you need it," she said.

"Also, most high interest savings accounts are also set up to encourage saving by offering bonus interest if you save $200 each month and make no withdrawals for example."

Still interested in cashing in on the gold rush?

Here's Mr Eliseo's tips on how to get started:

• Buy from a reputable brand of gold, from a well-established bullion dealer

• Make sure the premium you are paying is low and don't be afraid to shop around for a competitive price

• Ensure you can safely store the bullion you've bought with the dealer you've bought your gold from or open a private vault

• Rather than purchasing all your bullion in one go stagger your purchases. "This means if the price has a correction in the short term, you're able to buy some bullion at cheaper prices," he said.

• Remember gold is a long term savings asset and day to day prices are volatile, don't panic and sell just because the price might fall in the short term.

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