Will it make any difference to gold and silver whichever of these appalling presidential candidates gets elected to govern what still remains the world’s most powerful nation? Obama has accelerated the decline in the nation’s superpower capability, arguably Bill Clinton’s legacy, and the erosion is set to continue with his wife in office but would […]
DEEP UNDERGROUND in a secure vault in Zurich, Switzerland sits a gram of gold.
It’s yours if you’d like it, for free, today.
The gram is part of a 400-ounce gold bar, the only kind of bullion that professional dealers and international banks will buy and sell. It is 99.5% pure gold or better.
Gold fell from $958.95 in London on Friday to $942 at midday in New York before regaining a little ground. The Fall continued in Asian trading on Monday and by the mid morning session in London the price had dropped down to $937 an ounce.
All this negative activity seems as usual based on a fall in the price of oil and a strengthening of the US dollar.
With the gold and silver prices looking stronger by the day and with every prospect of spot gold at last breaching the $1000 a troy ounce that has proved so elusive after two attempts in the last twelve months, it is time to consider the miners of these metals as a way to buy into the gold action for some big profits.
Up until the last few years the only practical ways for the retail investor to gain exposure to the gold market was to buy either the physical metal and/or coins or invest in gold mining companies.
Buying bullion and coins has three main problems for the investor to consider.
Gold Mutual Funds ( Known as Unit Trusts in UK & ors)
Buying exposure to gold through a mutual fund is a relatively simple way to buy gold and enter the market.
Particularly in these highly volatile times there are safety features not all present in the alternatives. Investors money is spread across the spectrum of major producers, junior miners and explorers that operate principally in Africa, North and South America, Canada and Australia.
A well managed gold mutual fund offers investors the safety of exposure to a basket of stocks that would be beyond the financial means of the average retail investor.
In these days of uncertainty, owning physical gold in the shape of bullion bars and coins and storing them at home, in a safe deposit box or secure vault gives many investors the confidence that they may lack in paper gold virtual promissory notes such as shares in gold investment or mutual funds.
Gold ETFs arguably also come into this category.
Gold bullion bars are available in various weights ranging from one troy ounce upwards as well as in metric sizes. For example a one kilo bar weighs 32.15 ounces.
Gold bullion bars will almost always sell at a smaller premium than the more popular coins, and the larger the bar the smaller the percentage mark up.
The most popular size for the average investor buying less than one hundred ounces of bullion is the one ounce bar; they are easy to store and readily saleable when cash is needed or profits taken.
Larger investors may opt for ten ounce bars and in India and Asia the kilo bar is popular. Larger bars are available up to one hundred ounces but none have been minted in the US since the nineteen eighties.
Gold bars and coins come in different degrees of purity. Look for .9999 fine, older bars available on the secondary market may be .9995 fine or even .995 fine. If buying in the secondary market be aware of the difference over the spot price plus premium if the bar or coin is not .9999 fine.
Newly minted bars will be well packaged and protected, older bars may have damaged packaging or none at all and may be suffering from minor damage such as fine scratches so be aware!
There are around fifty accredited manufacturers of gold bars worldwide.
Among the most well known are
- Johnson Matthey
- PAMP (Produits Artistiques de Metaux Precieux) based in Switzerland
- Midwest Refineries in the U.S.
To avoid the many pitfalls of buying gold bars in the traditional manner, it is now easier to buy and trade physical gold, with access to up-to-date prices, charts and commentary on line.
Whilst we don’t guarantee this company we have sufficient confidence to commit our own funds to them.
Be sure to carry out thorough checks on any on line physical gold dealer as their authenticity is difficult to monitor over the internet, proceed with great caution before committing any funds.
Gold coins fall into two principal categories. Newly minted coins together with coins that are in effect bullion coins, the Krugerand is an example, and collectors gold coins.
There are numerous gold coins minted and issued by governments whose value is based upon their gold content, most usually one ounce or half an ounce in weight.
Purchasers must expect to pay a premium or mark up over and above the spot price of the coins’ gold content. There have been rare occasions when a direct application for a newly minted issue has not involved a premium but don’t hold your breath waiting for the next time.
The advantages of investing in gold coins are ease of storage and liquidity, although be prepared for the dealers profit margin when selling.
Collectors gold coins are a highly specialised market and is best left to the specialists or keen hobbyists. The premium is dependent upon the rarity of the coin and may even be double or more the value of the coins’ gold content.
When buying or selling gold bars or coins it is important to trade through reputable and reliable dealers. A list of authorised dealers can be obtained from the U.S. Mint.
Other countries have similar lists and in most cases these can be accessed on line.
For those who like the idea of building up an investment in gold coins, a good move is to establish a relationship with an established authorised dealer. As they are specialists in gold coin and bullion bars and rely on the goodwill of their customers they are in a position to give good advice to beginners in this investment arena.