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It is during difficult times [such as these when] quantitative easing and currency wars have highlighted the volatility and vulnerability of currencies…that the true, safe value of gold really stands out…Fortunately, it is now easier for you to convert your savings into gold… [than ever before and this article outlines the reason for buying physical gold and the advantages and disadvantages of buying gold bars, ingots and/or coins. Read on!]
This version of the original article, from goldcoin.org, has been edited* here by munKNEE.com for length (…) and clarity ([ ]) to provide a fast & easy read. For the latest – and most informative – financial articles sign up (in the top right corner) for your FREE bi-weekly Market Intelligence Report newsletter (see sample here).
If you decide to go to a dealer… in London, New York, Sydney or Toronto, they probably sell whole gold bars or smaller fractions as gold ingots and it all seems very safe and easy – but be careful what you pay.
The price of a 1Kg bar should be just a few percent above the price of gold but the smaller ingots do not compare so well. They are often sold up to 50% higher than the spot price.
You buy the gold over the counter and then what?
- Ideally you should store it in a vault for security. This protects the integrity and value of your investment because it never leaves the professional circuit and there are no unnecessary transport costs to eat away at your investment. It also makes resale very simple because the gold does not have to move. Remember that your bar or ingot will lose value immediately if it has left the professional circuit.@Investment Insights
When it comes to selling you will need to pay (and find) a professional to assay (verify) your gold…
- In the case of expensive smaller ingots the gold price will have to increase drastically to recoup the 50% premium before any return is made.
- In the case of a 1 Kg bar you will need to find a buyer who has the money for a whole bar and trusts you that it is what you say it is.
- A kilo bar is difficult to transport. At airports it is considered as a blunt instrument. It can only be insured at the post office for a maximum value of five thousand Euros (or equivalent).
- There are also false ingots which are either plated or filled with tungsten.
- The price of bullion bars only increases with the spot price. This is important to remember at resale. The most important moment for a gold investment is the moment at which you choose to sell it i.e. for a maximum return on investment.
- beware of over-priced small ingots,
- do not take possession of gold and
- when you buy a 1Kg bar ensure that it is from a reputable professional source and close to the spot price.
- [While] bars and ingots do not maximise the benefits during periods when the price of gold is high…allocated physical gold is always preferable to “paper” gold as an investment.
A Better Buy: Gold Coins
Gold bars and ingots, however, are not the best physical gold investment. Gold coins are.
- Why? Notwithstanding the possible 50% upcharge one must pay for the convenience (portability, weight, cost, ease of storage, etc.) of owning gold coins:
a) they rise in price with the gold price reflecting the pure gold content they contain,
b) their “premium” increases when demand is high and
c) the “premium” can be different depending on:
which country the specific coin brand (South African Kruggerand; American Eagle; Canadian Maple Leaf; the Swiss Vrendi; the UK Sovereign; etc.) is being sold in,
the demand for specific brands and
the extent of supply of specific brands by location.
When the premium of a gold coin rises dramatically, even if the gold price doesn’t, it means buyers are seeking the coin as a store of wealth and safe haven.
Physical gold investment is an excellent way to protect your wealth, especially during times of crisis and instability.
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*Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.
1. These Sites Are the BEST Places to Buy Gold & Silver Online – Here’s Why
Our review of the best places to buy gold online…[are] dependent on what your goal with the gold is — amassing physical bullion for financial security or to speculate on gold prices. Below are strategies and recommended dealers for each approach: Words: 532
2. What Do Gold Measurements “Troy” Ounce and “Karat” Really Mean?
You have no doubt read countless articles on the price of gold costing x dollars per “troy ounce” or perhaps just x dollars per “ounce” but the difference between the two measurements is significant. For that matter, what’s the difference between a 24 karat gold ring and an 18 karat gold ring? Let me explain. Words: 863
3. Before Buying a Gold-related ETF Check Out These Alternatives
There are many legitimate reasons to trade in gold and its derivatives. Gold has been proven time and time again to be an excellent “safe haven” investment, a holding that will appreciate in value during times of economic uncertainty. As such, gold may offer some valuable hedging and diversification benefits for a long-term portfolio. A number of exchange-traded products offering exposure to gold prices but not all gold ETFs are created equal. Here’s a quick rundown of factors to consider when making an investment in a gold ETF. Words: 1268
4. Surprise! A Close Look at GLD Reveals What it IS and is NOT
The most common misunderstandings regarding the primary gold ETF, SPDR Gold Trust (NYSE:GLD) is that it buys and sells gold. That is not the case. It is just a paper asset. It is not a way to buy gold and have someone else store your holdings for you. It is just an innovative way to “own gold.” [Below I outline more of just what GLD is and is not:] Words: 1470
5. All Gold & Silver ETFs Are NOT the Same: a Lease vs. Own Comparison
I have always been leery of the two big exchange traded funds, SLV and GLD, because they lease the gold and silver that they sell you. I much prefer the ETFs SGOL, CEF, PSVL and PHYS which actually own the gold and silver they sell you and store it for you segregated vaults. Words: 717
6. All Gold and Silver ETFs are NOT Created Equal! Here’s the Best
Whole oceans of ink have been spilled detailing the good and not-so-good points of the closed-end fund CEF (Central Fund of Canada) and the twin ETF’s GLD (SPDR Gold Trust) and SLV (iShares Silver Trust) funds. My goal here is to distill the salient points down to the fewest words possible to help make your due diligence task somewhat less…well…tasking. [Let’s go!] Words: 650
Very informative article and comments.
I have taken a different path towards adding to my portfolio by purchasing more manageable sizes and qty of 24 karat 999.9 Gold Bullion and coins, LBMA certified from as little as 1 grm through Karatbars International which is more affordable. Registration is Free and I can buy as little or as much as I can afford. My Gold can be vaulted for free or sent to me via Fedex whenever I choose. In the event of a currency collapse, I have also purchased a good qty of smaller denominations of CashGold in 0.1grm to .6grm which is more liquid and spendable and easy to transport. 0.1 grm starts from approx 5 euros
Really Deep Explanation awesome, Thanks for sharing helpful information about Buying Gold Bars. Gold bars are the safest, surest and simplest method of owning gold. If you are looking for buying gold in the UK then go for Bullion Gold Bar.
Bullion Gold Bar is a completely approved wholesaler of London Bullion Market Approved (LMBA) to buy gold in the UK or to invest in gold. Purchasing gold online at Bullion Gold Bar is fast, straightforward and secure.
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Under the present economic condition, everybody is looking to invest their hard earned money so they get good returns and their future is secured.
Gold ETFs provide an opportunity for investors to accumulate gold over a given period of time. Since it can be purchased in small quantities, one can plan the procurement as per future requirements, say, for the marriage of children, etc.
Moreover, there is no risk of theft and one need not worry about the storage cost (as in case of physical gold) because such units are held in demat or paper form.
In the case of physical gold, one ends up paying extra for making charges as well, but there is no extra charge applicable in gold ETFs. When needed, one can exchange them in multiples of 1 kg units of 0.995 purity.
If you do not physically possess your gold YOU HAVE NOTHING! It is very bad advice to “store it in a vault for security” as this protects “your investment because it never leaves the professional circuit…”. It’s this “professional circuit” that has been manipulating precious metal prices for years and I would not trust them not to sell the same ingot hundreds of times over to people not wanting to take physical possession. Goto GATAORG and see for yourself!
Gold coins are the safest, surest and simplest method to owning gold. I have owned every type of gold coin (I am a coin collector also). Modern bullion coins are the most trusted and tend to have the lowest spreads or mark-up over the gold spot price. World gold coins are also a great option, as they were also minted by reputable governments, have pleasing asthetics, and come in smaller denominations. World gold coins however, have gold content that are irregular and unknown to most. Secondly, when you sell, many dealers discount the coin below the spot more than their modern bullion counterparts.
These are my strongest recommendations for buying gold coins:
1) Buy coins with the lowest mark-ups over spot. 1 Oz coins are usually the best value.
2) Buy what is liquid: Gold Eagle, Kruggerand, Maple Leaf, Philharmonic, Panda, etc.
3) Buy coins that have both the gold weight and fineness already minted onto the coin. In a crisis, you wont have to lug around a reference book to prove the weight and fineness of your gold coin.
My favorite non traditional gold coin series was the Peruvian gold Soles – Beautiful asthetics, scarce but usually the same premiums as modern bullion, and both the fineness and weight are minted onto the coin.
Hey Tyler, You have good knowledge in gold coin market. I will definitely go through your recommendations. Thanks for sharing.
Required gold ingot bank in Italy caliber 21 24 with a list of prices and a certificate stating that it is the desired degree and certificate product and the quantity required in the month, 500 kg for a period of 1 years with a commitment to fulfill the contract and the ability to this work seriously and sincerely contact us immediately in a suit to ready for this work with legal commission to our company per% al kilo grm as an intermediary between you and the bank in Italy.
Appreciate this post. Will try it out.
I just purchased one ounce gold American Eagle and exchanged my gold grams into a gold Kuggerand. I thought the gold grams would be good for small denominations but I’d rather have the gold coins instead. I plan on purchasing various denominations of gold in coins instead of grams. It’s great to have gold and silver while its affordable. Sadly to say but when the precious metals begin to climb in price because a lot of people will continue to lose faith in our government. Also when they feel the squeeze in their wallets. Many people will be unable to afford gold and silver when it would be a time to own it after the economy worsens.
I didn’t put all my eggs in one basket. I want to own gold, silver and pre-1964 coins. Most important will be food, water and shelter. Get out of debt, too.
small coins, like 20 franc swiss,(about a 1/5 oz about $270) are small, recognizable, hard to fake, and small enough denominations to trade with in a currency collapse or to exchange for currency a bit at a time as needed. They are just as liquid, spendable with out trading a whole ingot or bar in for a pile of paper that may still be inflating….if you want to trade in all at once bring the whole bag to a dealer at once. flexibility