Investing in gold is exciting
because of the
unusually large number of ways you
can purchase gold in
today's market.
You can invest in physical gold
by buying gold
bullion bars, coins or medallions --
some of which sell
for less than $25. Or you might want to use your credit
card to buy a bank's gold certificate
that represents
your ownership of gold and is
redeemable on sight. Or
you can start a gold accumulation
program for as little
as $100. If you feel more at home with stocks, you
might
want to consider shares in companies
that mine gold.
There are also mutual funds, and more
speculative gold
futures contracts and options --- and
many more.
Your very own gold bar!
Many investors prefer to take
physical possession of
their gold in order to have tangible
control of their
asset. Pride of ownership moves other investors to
have
their gold within reach so that they
may display it to
friends or admire it in the comfort
of home.
If you like the idea of taking
physical possession
of gold you may want to buy the metal
in the form of gold
bars or privately minted coin-like
medallions.
The standard unit of gold in
international trading
is still the 400 troy ounce (12.5
kilogram) bar with a
fineness of 995, referred to as a
"London Good Delivery
Bar". One troy ounce is equal to 1.09714 regular
ounces.
The purest gold of 999.9 fineness is
used in the making
of smaller bars.
Gold bullion bars are available
in at least 19 sizes
and weights ranging from a tiny
one-gram bar and pocket-
sized kilobar (32.15 troy ounces) to
the large 400 troy
ounce London Good Delivery Bar. This
variety offers a
wide spread in gold bar prices -- running from under $20
to $140,000 -- providing
opportunities for even the
smallest investor.
In addition to the advantages
connected with having
gold under your own control, there
are several other
reasons favoring investment in gold
bullion bars. For
example, commissions on the buying
and selling of bullion
bars are minimal. You will find it easy to sell gold
bullion bars bearing the names of
reputable refiners.
And prices are quoted throughout the
world.
Gold bullion may be purchased
from precious metals
dealers, precious metals exchange
companies, major banks
and many brokerage firms.
Gold Coins - The Universal Treasure
Gold coins have fascinated the
world's investors for
over two thousand years.
Many ancient gold coins are both
rare antiquities
and miniature works of art. They are bought and sold as
individual items within the coin
collecting (numismatic)
community at prices well above the
value of their gold
content.
There are also many modern gold legal
tender coins
that are frequently very beautiful
and are issued in
limited quantities to commemorate
events or persons of
national importance.
Gold Bullion Coins are the "Gold
Coins" of the investing
public
Although many numismatic gold
coins have been
purchased by investors, most
investors think of gold
bullion coins when they think of investing
in "gold
coins". And bullion coins are favored by many
investors
who want physical possession of their
gold.
The popularity of these coins
and privately minted
coin-like medallions can be
attributed to their small
size, convenient weights, and
easiness to store.
The "typical" gold
bullion coin is legal tender of
a nation and its gold content is
guaranteed by the
issuing nation. It bears a face value that is largely
symbolic because its market value
depends totally on its
gold content.
If you invest in gold bullion
coins, or in privately
issued coin-like gold medallions,
pieces, or "rounds", it
will be easy for you to keep track of
the daily value of
your holdings because many of the
most popular gold
bullion coins and medallions contain
one troy ounce of
pure gold. And the price of one ounce of gold is
reported daily in most newspapers.
Other bullion coins have been
minted in easy
fractional weights such as 1/2-ounce,
1/4-ounce, and
1/10-ounce. Among the countries issuing bullion coins
are South Africa, Canada, Mexico,
China, Great Britain,
and the United States.
Bullion coins normally sell for
a 3 to 15% premium
over the bullion value of gold, but a
large part of this
premium may be recovered at
resale. The premium of gold
coins is justified by their ready
divisibility,
convenience, portability and
marketability.
Bullion coins and privately minted
gold medallions
can be purchased at selected banks,
precious metals
dealers and brokerage firms. You can also buy them at
coin dealers and jewelers. Smaller
bullion coins are
becoming increasingly popular as
investment jewelry.
If You Don't Want Physical Possession
of Your Gold...
If, as an investor, you value
convenience and speed
over physical ownership of gold, you
may prefer to invest
in gold certificates, accumulation
plans, futures
contracts, options,gold mining
shares, or gold funds.
Gold Certificates Are Easy to Buy and
Sell
A gold certificate provides you
with an attractive
alternative to investing in physical
metal.
Issued by many banks, gold
certificates obligate the
issuer to deliver a stated quantity
and fineness of gold
to the buyer in accordance with the
issuer's terms and
conditions.
With a gold certificate, the
investor's exposure to
gold is identical to bullion, but has
the added advantage
of providing convenient storage. Since many financial
institutions issue certificates in
fractional amounts,
you have the opportunity to invest in
convenient dollar
amounts.
Certificates are also easy to
buy and sell. Some
major banks will even accept your
credit card purchases
by telephone. By buying a certificate, you receive
certain other benefits. You don't pay
any fabrication
charges. There are no delivery charges. While your
bullion is on deposit, insurance
coverage will be
maintained. You don't have to ship the bullion back when
resale is desired.
Your bullion position and the
approximate current
value will appear on your regular
statements so that you
will always know what you own. And since your
certificate is an obligation of the
issuing institution
to deliver gold, you may exchange
your certificate for
the underlying gold at any time, or
sell the certificate
through the issuing institution.
Gold Accumulation Plans -- Economical
Way of Enjoying
Ownership
The gold accumulation programs
offered by many
precious metals brokerage firms allow
the investor to
enjoy all the benefits of investing
in gold without the
responsibilities and costs of
handling and storage.
With accumulation programs, you
sometimes need as
little as $100 to be able to start
buying gold. And once
you have opened your account with a
reputable brokerage,
you can add to your investment in
amounts as small as $50
or as large as $5,000.
Buying gold through accumulation
programs can
provide you with a number of
advantages. You can make
purchases at any time. Your order will be combined with
other orders received that same day,
and will be executed
the next business day. Since your brokerage house or
bank buys and sells in the wholesale
bullion dealer
market, you are assured of
competitive prices.
Because you are investing by the
dollar amount and
not by the ounce, your purchases are
made in whole or
partial ounces. And you pay discounted commission rates
that are up to 40% less than a
regular broker charges on
transactions.
Your gold is stored in major
depositories and is
fully insured. Your record keeping is done for you, and
you will receive a confirmation of
each transaction and
a periodic summary statement. While you leave your gold
in an accumulation program, you do
not have to pay state
or local taxes.
You can liquidate your
accumulation plan holdings at
any time. And when you do decide to sell, you will
avoid
paying costly assaying fees for
weight and purity
testing.
In a separate section we discuss
GoldPlan, a Swiss
gold accumulation program which
combines these advantages
with traditional Swiss secrecy.
Gold Futures Contracts and Gold
Options
Gold futures contracts were
originally designed to
help industrial users to protect
themselves from adverse
fluctuations in the price of gold.
Like futures contracts for other
commodities, when
you buy a gold futures contract you
promise to purchase
or sell a specified quantity and
grade of gold on a given
date for a certain price.
In the case of options, you do
not promise to buy,
but you do have the right to buy gold
at a fixed price on
some future date.
Through expert use of
"leverage" -- the difference
between the margin (capital invested)
and value of the
assets controlled by the contract --
profit potential can
be very high.
However, the risks are just as
high, or higher for
those who are not schooled in the
intricacies of options
and futures contracts. You should discuss futures
contracts and options with a trusted,
experienced broker
before investing in these, the most
speculative ways of
participating in the gold market.
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