When it comes to protecting one’s wealth from inflation, economic turmoil, currency fluctuations, and even war, few assets have held their own against gold throughout history.
If you’re thinking about making an investment in gold, don’t limit yourself to purchasing only actual bars or coins. Stocks in gold mining firms and gold exchange-traded funds are two options for investing in gold (ETFs). Options & futures contracts can also be used to invest in gold.
Investing In Physical Gold
For those who are more used to trading stocks or bonds on the internet, investing in gold can be a bit of a stretch. To buy in physical gold, you’ll typically deal through dealers outside of standard brokerages, and you’ll likely have to pay on storage and insurance. Bullion, coins, and jewellery are the most common ways to invest in actual gold.
Bullion In Gold
Investing in gold bullion is what most people imagine when they think of it—large, gleaming gold bars in a vault.
For the most part, one- or 10-ounce bars of gold bullion are the most widely available. Investment in gold bullion is too expensive at a current ounce price of $1,900 (as of September 2020). There’s no way to have a fractional part of a gold bar like there is for stocks.
You need to choose a trustworthy dealer and pay for delivery with insurance, or pay for storage in a huge vault or even in a deposit box because of the high price of gold bullion.
Bullion investments in gold are a great way to diversify your portfolio, and it’s also a great way to keep an eye on the gold price so that you can buy at the proper time.
Coins In Gold
Although half-ounce and quarter-ounce gold coins are also available, the most common gold coins weigh 1 or 2 two ounces. South African Krugerrands, American Gold Eagle and Canadian Maple Leaf coins are the most commonly available gold coins. Some coin dealers also sell blanks & worn or broken coins.
However, gold coin values may not always be in line with their gold content. When coins are in high demand, they can fetch quite a bit of money. In mid-September 2020, for example, a one-ounce American Golden Eagle coin will cost slightly over $2,000 at retail. Over a similar proportion of gold bullion, that’s approximately a 5% increase in the price.
There are times when buying gold coins from an unlicensed dealer is more cost-effective than going to a local coin collector or pawn shop, but in general it’s safer.
Jewellery Made With Yellow Gold
As an alternative, you can buy gold with in form of jewellery and wear it yourself—or buy gold that was worn by someone else but was broken. There are various risks associated with investing in gold jewellery, which are not associated with investing in gold as a whole.
You must be cautious while purchasing secondhand jewellery, as not all of it is sold by reliable merchants. When you try to resale the piece, authenticity matters to both you and the buyer. Because of this, it is vital to purchase investment jewellery from a trusted source, and to secure the necessary paperwork.
This means that the price of the jewellery will vary depending on whatever company created and made it. This might be anything from 20% to ever more about three times the raw value of the precious metal.
It’s also a good idea to keep an eye on the purity, or gold content, of your jewellery. The karat weight of gold is used to determine its purity, with 24 karats becoming the purest kind of gold. A piece’s melt value (the raw worth of your jewelry’s components when it’s melted down to pure gold) drops if the purity is lowered.