Investing in Gold
Many people have come to the realisation that gold is a sound investment. For centuries different nations and individuals have sought to own gold as a sign of strength and power.
More recently it has been a great hedge during lean economic times and it is a steady performer when the economy is going strong. Some people prefer to invest in actual gold bars while others prefer to invest in gold coins. This article will examine the basic differences between investing in bullion bars and numismatic coins.
Gold Bars: Ease of entry vs ease of selling
For a person getting started in gold investments gold bars offer a simple beginning point. The big bars, one kilo or more, typically are sold at the lower premium points compared to the value.
However, when it’s time to sell a large bar the seller must wait on a buyer that wants a bar of that size. Most investors do not have the means to separate a kilo bar into smaller increments. This severely limits the number of people that will be available and willing to purchase the bar.
Gold coins: Smaller and more efficient
Gold coins are usually offered in one ounce sizes. This makes them easier for various governments to produce and distribute. The ease in which these coins are produced make their prices close to the same as bars of one ounce size. Most people enjoy an easy time of reselling since most investors easily recognise them.
Price Fluctuations on Gold Premium
When discussing gold transactions most investors in the know discuss the “premium.” Premium is the amount that the gold actually sells for over the bullion value. As demand and the available supply changes the premium also changes. Whenever an investor decides to buy a block of 100 Krugerrand the premium is very near the same as the gold bar premium.
Selling Gold Coins and Bars
When looking at premiums for bars and coins most people assume the large kilo bars are the optimal way to invest. However, this is a very narrow approach. While the premiums on coins is usually higher, they are often sold to a much broader audience. These coins often sell at much higher price points as well.
Purchasing New or Old Coins
When considering the purchase of coins investors must face another decision; new or old. The newer Krugerrand made in one ounce bullion size typically can be purchased much cheaper than the older sovereigns or Swiss francs. The older coins have more historical value and therefore command a higher price.
Clearly each investor has their own likes and dislikes with some preferring older style coins with their heritage. While others lean more towards the shiny large bars that seem to exude wealth. Whichever route a person decides to take it is best to remember that gold investing is not a “one basket” approach. It is merely one section of a grander investing plan that is designed to produce sizable profits in the long term.