Investing and Buying Gold Bullion
Gold is a precious metal and has long been regarded as a reputable means of storing wealth, that has been part of the world's culture for thousands of years. Investing and buying gold bullion is something that increasing numbers of people are considering.
The Value of Gold Bullion
During times of financial and political instability, recession, currency fluctuation, gold bullion has traditionally served as a store of value. This is because Gold bullion is unable to be debased like so many "fiat" national currencies.
This is why in difficult times investors often buy gold bullion for its percieved "safe haven" status as an asset class. Previously the preserve of the very wealthy, Gold investing is increasingly opening up to everyone. But newcomers to bullion would be wise to take the time to learn the basics before taking the plunge.
The things you need to know when buying gold bullion include:
- Understand what constitutes investment grade gold bullion. Gold bullion is an investment grade gold which can either be in a form of bars or coins. Gold's purity, often quoted in karats (24 being pure gold). Most investment gold coins or bars vary from 22 karats to 24 karats. Conversely, jewellery and other gold items in lower purities (9 or 18 karat for example) are not generally considered to be investment grade gold bullion, though their scrap value will of course rise and fall with the value of gold they contain.
- Decide the kind of gold bullion that you want. If you want to start with something smaller choose one ounce (or smaller fractional) gold coins as such coins are easy to buy and sell and the market is very liquid. Popular one ounce Gold Bullion coins are: the Austrian Philharmonic, American Eagle, Canadaian Maple and the South African Krugerrand.
- If buying bars, the best option is usually to buy the purest quality of gold bullion 24 carat / 999 purity of a recognised brand, from a reputable source. When selling the gold, the market for these types of bars is much more liquid, and a buyer easy to find.
- Quantity is also a key consideration when buying bars. If you buy a kilo bar and then need to realise some money from it, you will have to sell the whole thing (or get the hacksaw out!). If you purchase many smaller bars, you can sell a few as and when you need to realise the money.
- Buying larger Gold bars will tend to be cheaper on a cost per ounce basis, because larger bars sell for lower premiums. Small bars whilst more expensive on a cost per ounce basis, because of higher premiums will also be faster and easier to sell if you need to.
- The price of any physical gold bullion will nearly always trade at a premium above the "market" price of gold. This premium will fluctuate significantly depending on market forces and you can use bullionsupermarket.com to compare these premiums to locate the best value before deciding to buy.
- Deal only with reputable dealers and individuals. When buying through online auctions, ensure that the feedback of the seller is good enough and that you are comfortable making a transaction with them.
Article Published On: 17 May 2009
Article Revised On: 11 May 2011
The above article is for information purposes only, and is not advice. Its accuracy cannot be guaranteed and no responsibility for errors or omissions can be accepted by the website owners.
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