Investing in Gold

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Investing in Gold

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Investing in gold may involve an investment of physical gold through the purchase of gold bullion, or a “paper” investment through the purchase of gold shares.

Gold bullion consists of gold bars or refined coins, and comes in varying weights, types, sizes and grades. Gold is considered a liquid investment and is traded round-the-clock on a global basis. Investment in gold is often used as a tangible hedge against inflation, as well as a means of enhancing or preserving an asset base. It is not unusual for gold to account for 5% or even 10% of an investment portfolio’s assets.

Gold Bars

Most gold bars have a purity value stamped on the bar, with the average value being 99.98% pure. The weight of a gold bar varies, ranging from less than a single gram to 440 grams. Each gold bar will have four marks which uniquely identify it: refiner’s mark, gross weight, purity value, and serial number. Gold bars should be purchased in the largest size affordable, and should be purchased from a reputable and trustworthy dealer who will test and assay the bar, and whom can certify its solidity.

Gold Coins

Gold coins come in a variety of classifications. Some are rare, old or new. Gold coins can be purchased online and at coin shops around the world. Most countries mint gold coins for collector purchase, even though they are no longer used as currency. The value of a gold coin is dependent upon the weight of the gold and the price of gold on the spot market, as opposed to the face value of the coin. Most newly minted gold coins have been struck more than once, and are known as “proof” coins; as such, they should not be handled outside of their original bubble wrapper, or unless soft gloves are worn. Gold is a soft, pliable metal, and can easily be marred and affected by the oils on the skin; such defects will devalue the gold coin.

Exchange Traded Funds

Similar to buying stock in a company, an investor can buy a “share” of gold through investment in a gold ETF, several of which are traded on the NYSE and the AMEX.

The record price, when adjusted for inflation, was $2,100 in 1980.

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Photo source: http://www.flickr.com/photos/11139043@N00/1439804758/

Source:
http://www.kiplinger.com/columns/fundwatch/archive/2008/fundwatch0222.htm http://goldprice.org/buying-gold/2006/01/investing-in-gold-bullion.html http://www.blanchardonline.com/blanchard_products/bullion_investing_guide.php#liquid
http://goldprice.org/buying-gold/2007/03/gold-coins.html

Last update: Jun 27 2008, 6:31 PM EDT by melana.yanos (content history | content tools) (help)

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