How to Buy Gold Coins or Gold Bars and Bullion
Two Ways to Buying Gold: Physical Gold Coins and Gold Bullion Bars
Jan 18, 2009
MoneyWeek stated in Investing in gold that “Gold has been valued since the dawn of civilisation. Unlike most investments it doesn't pay a dividend or any form of income. It's best seen as a hedge against financial instability.” For the investor there are two main options to buy physical gold coins and bars as opposed to alternatives such as gold funds, shares and futures.
How to Buy Gold Coins
There are many different types and weights of gold coins. Proof gold coins have been created for special occasions and primarily for collectors -- consequently they tend to command a price premium. Brilliant uncirculated gold coins are similarly small commemorative mint runs with the coins also having a scarcity value. Coin collectors or numismatists will often have specialist knowledge and therefore gold investors should void these coins and buy the common gold coins such as one-ounce South African Krugerrands, American Eagles, Canadian Maples, British Britannias or Australian Nuggets.
Buying gold coins can be done through the local country mint such as the US Mint, UK Royal Mint or Australian Perth Mint. Alternatively, local gold coin dealers will also buy and sell gold coins such as Coininvestdirect.
Gold coins provide the satisfaction of something tangible that in small quantities can be held by the owner and insured as needed. These coins are relatively easy to exchange with gold coin dealers as they are common and have a known gold content and purity.
How to Buy Gold Bars and Bullion
Buying gold bars is an option for those investors who wish to buy a substantial quantity of gold and do not wish to pay the premium for gold coins or to hold it themselves. The gold market is centred in the UK and London Bullion Market Association [LBMA] is the trade association that represents the wholesale over-the-counter market for gold in London. Gold bars can be bought in various weights. Because there is a significant variability of weight and size the gold content is potentially unknown and typically a specialist gold dealer is needed for gold bars to confirm the gold content or purity of the bar. This uncertainty can be addressed by Good Delivery gold bars.
Good delivery gold bars are cast by a small group of precious metal refiners accredited by the professional bullion dealing communities in London, New York and Zurich. This ensures that the gold content is 99.5% or better fine gold. These good delivery bars have high integrity because they have never been in private possession and consequently this known history and confidence in the purity of the gold content allows this gold bullion to be easier to buy and sell. Buying gold bars and bullion is really for the large professional investor rather than the small private investor. However, the small investor can access these markets by using specialist services that cater to the smaller investor who wishes to buy gold bullion and have it stored for a small charge such as BullionVault.
Buy Gold Coins, Bars or Bullion
To buy gold coins or gold bars:
- Buy Gold Coins. Gold coins can be bought from dealers or a mint, often with a price premium varying between 3% - 15% over the spot price of gold. Ideally, buy the cheapest of the common gold coins
- Buy Gold Bars and Bullion – can be bought from a member of the LBMA and the price is typically more competitive than for gold coins
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