You are retiring and setting yourself up for the next phase of your life. The biggest question you have to ask yourself at this stage is what will the gold be used for? Is it to have to pass on to your family? Do you need it to supplement your Social Security or is it a fun investment for a rainy day?

Most likely you will want to take on less risk and buy gold in case of emergencies or to pass on to your family, which means physical gold is your best bet. You can buy gold from various Web sites and store it at home in a safe or at a bank in a safety deposit box.

Another option is to use gold dealer sites like Kitco.com or BullionVault.com, which buy, store and sell the gold for you. All these options, with the exception of storing the gold at home, require fees, but limited counter-party risks.

There are some external factors to watch out for. First, scrutinize how much a dealer is charging you for your gold item. A typical premium is 10% which means the gold price must rise 10% from when you buy the gold for you to break even on your investment. Use this simple equation (below) to avoid a lot of heartache.

Premiums can run as high as 75% for percentage ounce coins and rare coins where investors seldom recoup their money.

Next, make sure you actually own the gold you think you do. If you buy gold from a bank and the bank stores it for you, you may be purchasing unallocated gold.

"Unallocated gold came along because it was a way for the banks and some of the big refiners to sell gold to investors, keep it in their vaults, but actually work it for their inventory," says Adrian Ash, head of research for the BullionVault.com. If you buy unallocated gold, you are a creditor of a bank. If the bank goes belly up, you have to wait in line with everyone else to get paid.

To mitigate these risks, avoid free gold storage, says Ash. "Just beware if someone says: 'I'll look after the gold for you, but I'm not going to charge you for it.'" If the deal seems too good to be true, it probably is, says Ash.

Regardless of how old you are, consider gold jewelry as a long-term investment. Most jewelers will buy your old gold and give you cash, which makes this area of the gold market one of the most liquid.

If you're buying gold jewelry for yourself or someone else, take a bit of extra time and find the best grade available to ensure the piece retains its value over the years. Using a spot price of $1,200, an 18-carat piece of gold jewelry is worth about $152.

The gold price has risen from $35 to an intra-day high of $1,265 an ounce in the past 42 years. Although physical gold doesn't offer dividends or huge short-term returns, it does provide investors with a "safer" place to put their money, its just a question of how to buy.

______________________________
Disclosures:

Disclosure information was not available for Steel or her company.

Disclaimer