To begin our start on Investing in Gold, Silver Monthly would like to set the stage for this section of the site. This new section will focus on much of the same information as our Silver Investing articles have over the past few years. But to really start this article will paint a broad picture of investing in gold. Later on, we’ll add more in-depth articles on specific topics.
For thousands of years Gold has been used as currency and been a highly prized precious metal. Gold has always been a favored investment to hedge your portfolio against inflation. Gold prices in the international gold market can remain fairly stable through times of instability, recession and currency fluctuations.
The ways of investing in gold can be via purchasing physical gold bullion in the form of gold bars or gold rounds, minted gold coins. Gold shares in gold mining companies are also available and various types of gold funds or mutual funds that are managed by professional investors.
Holding at least a small percentage of your stock portfolio in gold bullion is always a good idea. The relatively stable price of gold can help insure your investment portfolio against economic instability. Gold bullion prices may fluctuate over the years but gold investments are highly unlikely to get devalued and have performed well over recent years.
Gold coins have a legal tender face value in the countries currency that they were minted, and can be easier to dispose of if you need to liquidate your gold assets. Many types of gold bullion rounds or gold coins are available, such as American Eagles, Krugerrands, Sovereigns, Canadian Maples, Australian Gold Nuggets, Chinese Gold Pandas and many more.
Gold bullion bars are available in many different sizes up to 400 ounce size. The 400 oz bullion gold bar is the London Good Delivery bar size. Good delivery bars must meet certain specifications, they must weigh between 3,50oz – 4,30oz and be of a minimum purity of 99.5% pure Gold. These London Good Delivery bullion bars are normally held by central banks and not usually held by smaller private investors.
Mining shares can be lucrative but their performance depends on the success of the mine and the general standing of the mining company you are investing in. Therefore mining stocks may not follow the general trend of the gold fix market, but can outperform the market if the mining company is particularly successful.
A precious metals gold managed fund can provide a more diverse gold stocks portfolio. The funds manger may invest in various precious metals and gold shares spreading any risk between a selection of stocks. Precious metals mutual funds are available that also invest in other metals such as Silver, Platinum and Palladium as well as gold stocks.
The most cost effective way to invest in physical gold is to buy larger bullion bars. Gold bullion in bar form offers the lowest gold dealers percentage over the gold market price, depending on the bars size the dealers premium over fix can be as low as 2% – 5%. Compared to the premium on various gold coins of between 7% – 20% or more gold bullion bars appear much more attractive financially.
Although the fact that gold bullion rounds or coins are much more liquid than bars may sway your decision to purchase bars. Gold coins can be disposed of on the open market fairly easily and quickly in comparison to large gold bars. Coins are also much easier for the smaller investor or private individual to obtain and to store. There is also the collectible and historical value that gold coins have against gold bullion bars.