There are different ways to invest in gold and each has different associated costs and liquidity. The safest types of gold investments are gold bullion coins, gold stocks, and gold mutual funds. We’ll cover the first one in this part of the guide.
It is false to assume that gold bars are the only form that gold bullion takes. The term “bullion” refers to a refined and stamped weight of a certain fineness of precious metal. Bullion can be purchased for the price of gold plus the costs to refine, fabricate, and ship the item. Gold bullion is a practical, as well as easily tradable, form of gold.
Though purchasing gold bullion bars is an efficient way to own physical gold, the bricks are large and usually require storage in a precious metals facility. Liquidating them is quite costly, involving refining, assay, and handling fees. Gold bullion coins are much more conveniently sized and are more easily tradable.
These gold bullion coins are struck from gold and held as a store of value, to be retrieved and used later. They are purchased for investment purposes rather than to be used in daily commerce. The coins usually have the characteristics of being minted after the year 1800, contain a purity of at least 0.900, and were or are used as legal tender in their home country.
Popular gold bullion coins are the American Eagle, American Buffalo, Canadian Maple Leaf, Chinese Gold Panda, Swiss Vreneli, and South African Krugerrand. These bullion coins may come in various weights that are either fractions or multiples of one troy ounce. They are sold on the commodities exchanges at a premium over the gold market price. The type and weight of the coin determines the premium, as does current demand. This premium usually makes it ineffective to invest in gold bullion coins for the purpose of profit. They should be held primarily from the standpoint of financial security — for when things get bad.
Gold bullion coins can be purchased from a coin dealer or directly from the government mint located in the country of production. They can also be found through brokers, banks, flea markets, antique shops, and shady online auction sites. An investor should research the history and value of a bullion coin and make sure that it is authentic before making an investment. The entity from whom the coin is being purchased should also be thoroughly researched. The United States Mint publishes a list of authorized gold bullion coin dealers on its Web site.
Almost every day, I’m asked which 1-ounce gold bullion coins are best. The answer is: pretty much any 1-ounce gold coin minted by a nation or government. They’re mostly the same, and it won’t make or break your investment. I’m a fan of American Eagles and Buffalos, but that’s just my national preference.
Of course, gold coins aren’t the only way to invest in gold, so read on!
Next Part: Gold Stocks