The main reason to buy gold is that bar unimaginable catastrophes – gold will increase in value. Not only that but at this time of horrendously low interest rates on savings accounts with banks and building societies, gold is almost certainly better than money in the bank.

Yes, the price of gold has its ups and downs – on a daily basis! – but the overall trend during the past 10 years has been ever upward. To such an extent that gold prices per gram are almost 500% higher than they were 10 years ago. There was a period in the early 1980’s when there was an incredible, but short-lived, gold boom, but prices now are substantially higher than they were even then.

How to Buy Gold

I am only going to talk about actual physical gold here: gold bullion or bars, gold coins and gold jewellery. This is by far the easiest way for the small investor to stash some money away in gold.

My top 2 places to buy gold in the UK, may surprise you!

My number 1 choice of where to buy gold is eBay. You may have to hunt to find the bargains but it is still possible to find pieces of gold jewellery selling on eBay for less than their scrap gold value. It is also probably the cheapest place to buy gold coins such as Sovereigns, half Sovereigns and Krugerrands.

You may think you are taking a risk by buying on eBay but in reality there is very little risk involved. If you pay for an item via PayPal you will get your money back if you do not receive the goods or if they are not as described. To be extra secure use your credit card via PayPal then you have reduced the risk to zero.

For example at the moment (July 2011) a standard full gold sovereign from the 20th century (this does not include proof issues) will cost you £220-£240 whereas a brand new one from the Royal Mint costs £269 for a 2010 issue and £285 for 2011. The scrap value of the actual 22ct gold content of the sovereign coin (7.98g) is around £218. A gold coin bought on eBay is unlikely to be in mint condition but this makes little difference to the resale value of modern coins. It is only when you look at Victorian or older gold coins that condition is a vital element of value as they tend to be priced well above scrap.

Of course, there are a lot of people willing to buy scrap gold and gold jewellery on eBay right now but there are still ways for you to pick up pieces at bargain prices. It is pointless for the smaller buyer to look at job lots of scrap gold which are advertised as such – you will get outbid by the more experienced buyers. Instead look for single gold rings from inexperienced sellers that are badly described. Often rings that are worn, bent, have personal names, initials or engraving or are just plain ugly, sell for low prices – sometimes less than scrap value.

You can also frequently pick up bargains if you bid on rings containing stones – the gold buyers usually stay away from these and if you can find an unattractive engagement ring from the 1970s you are more than likely on to a winner. Just make sure you have a cheap but good hallmarks book and a Jewelers Loupe so that you can check the gold hallmarks when your purchases arrive.

My second choice of where to buy gold in the UK is even more likely to shock you – Argos!

Argos buys gold jewellery in huge quantities and frequently have special offers where they sell unpopular pieces at way below the normal retail price. It is possible to buy items of discounted gold jewellery from Argos at only slightly above the scrap value of the gold.

When to Sell Gold

The answer to this question is only when you absolutely have to or when you have planned to. As I have said before, gold is better than money in the bank and the longer you can hold onto it they more valuable it is likely to become.

Having said that buying gold is a fantastic way to save for something. It is easy to buy and even easier to sell. Just imagine what a great investment a gold sovereign coin bought for a baby every year on their birthdays and at Christmas would be? They wouldn’t have to worry about a student loan when it came time for them to go to University or it could even fund a car purchase or a deposit on a flat.

Maybe you want to save for your retirement or to take that dream cruise in a few years time. Just buy a 9ct gold chain from Argos or eBay then every month buy a gold ring and hang it on the chain. In a short time you will have a valuable nest egg.

Invest in Gold with Gold Bullion, Gold Bars or Gold Coins

You may find it a more attractive prospect to invest in gold by buying gold bullion or bars or gold coins. Ordinary gold jewellery in the UK is commonly 9 carat gold, but gold coins and bars will usually be a much higher quality – 22 carat or pure gold 24 carat. These are therefore far more valuable per gram.

Again, you can pay a premium price for premium quality or you can go for the cheaper option from eBay.

Buying gold as an investment or a savings plan is as safe as (or even safer than) houses.

In addition, check the shipment process for you to sell gold jewellery. The courier service for shipping the valuables should be secure with no chances of losing the valuables before they reach the jeweler. Ask whether they insure the valuables during the shipment process and whether you can get the stones back if the price does not meet your expectations. In addition, they should indicate if there are optional ways of evaluating your jewellery, such as sending their experts to your residence instead of transporting the valuable items to them. This is important because of the security of the pieces you want to trade. The best way to do this is to visit the company’s offices before planning to send the valuables, so that you know the people you are dealing with and their location.

Thirdly, sell gold jewellery to a company that gives you the best rates. There is no need to settle for less because you have not done your homework to find a company that offers good money for your pendants, chains, nuggets, earrings or rings. Remember, the amount you get depends with their evaluation of what they want. If they do not find the quality they are looking for, they will quote the price of the existing quality and you have the right to accept or recall your pieces.  In addition, you can try several companies if you feel the deal is not good enough in relation to the market value of the items. Inquire about the shipment charges or other expenses that you may incur in the sale before you sign the deal. This may take up a substantial amount of the profit because you need secure shipment facilities and they do not come cheap. Avoid additional charges at all costs and in this way, you will end up having a large sum when the final sale goes through.

This is a consequence of the state of the economy.  In a recession gold prices always rise and now prices are at an all time high.  The companies who want to buy your gold are gambling that there are still more price rises to come.

There is also the added factor of the recent distrust in banks as safe places to put your savings.  Add to that the pathetically low rates of interest being paid by the banks and building societies and putting money into gold seems like a better idea than ever.

Of course, this does also make it a good time to sell gold.  The price you can get now is far higher than you could have expected a year or even just a few months ago.  Gold prices hit a high of $1,000 per ounce earlier this year and have now gone well over that.  The scrap price of 9 carat gold (most commonly used for jewellery in the UK) is over £7 per gramme when it was less than £5 only months ago.

Now £7 per gramme may not seem very much when you look at the prices of gold jewellery in your local jeweller’s window.  You may find that a plain 9 carat yellow gold wedding band which probably weighs around 3 or 4 grammes is priced at £50, £100 or even more depending on the shop.  However, look in your local pawn shop window and you will see much more reasonable prices on second hand and used gold.

If you own any vintage or antique gold jewellery; sovereigns or any other gold coins then selling to one of the companies that buy scrap gold is not your best outlet.  Antique gold and gold coins are usually worth far more than their scrap value.  Rings or other pieces of gold jewellery containing precious stones are also worth more than their scrap price.

Take your more valuable items in to your local jewellers for a valuation.  But do shop around as some places will charge you £50 for a valuation and others will charge £5.  They may even offer to buy your better pieces from you but be aware that there is no way to do this anonymously as they will require sight of your passport or driving licence before they give you the money.

If the gold that you want to sell is mainly broken pieces of gold jewellery, snapped chains or odd earrings, then one of the big companies that will send you an envelope so you can just pop in your gold and send it back to them, are probably your best bet.  They give a good price for gold scrap and some even send you cash by return.  Ideal if you are in a hurry for money.

Selling gold can be a nice boost to your finances when you need it the most.