Thursday, January 05, 2006

Buying Gold

Buying gold can be done in a variety of different ways. Each have their advantages and disadvantages.

Listing them we have:
  • Gold Coins
  • Gold Bars or Bullion
  • Gold in Escrow (also known as Digital Gold)
  • Investing in Gold Producers such as mineral companies(miners), mints and even gold futures.
Gold coins and gold bars are perhaps the most popular for gold enthusiasts. Gold in escrow, such as for example, are relatively unknown. People who invest in mining shares do so not so much for the product that a company produces but more for the financial progress and performance of the company in the market place.

Investing in gold coins and bullion bars has the advantage that you always have your gold. You can store and/or hide it and the gold value tends to remain stable if not increase over time. The disadvantage is that it is not always easy to transport if you have a large quantity. Gold is heavy and can be difficult getting through customs and security in some countries. That said, you can buy gold in most countries quite easily, even from overseas and have it shipped to you. It is also relatively easy to sell.

Investing in gold companies, such as miners, mints and so forth is subject to the vagaries of the stock market and the performance of the company. The company may have an excellent or poor performance in the mining of gold and also may enter into other activities that influence their share price. This is not for the gold enthusiast particularly and certainly not for the faint hearted. It requires much study of the companies and corporations involved and there are fee and tax considerations to take into account, that would not apply with the simple purchase of gold coins.

Gold in escrow has some advantages in that the gold never moves from it’s storage facility. Companies such as store gold in bank vaults in the traditional 400 troy ounce bars and one can simply purchase an amount or portion of that gold. One’s holding is represented by an account online which details the transactions of buying and selling the gold or even just plain 'spending' it to other account holders for goods and services which they provide. In this way it is used more as a transactional medium than an investment. The advantage with this system is that it can be accessed from anywhere in the world. There are no storage or security issues to attend to. The value of the gold is retained and moves with the daily value of gold everywhere. And the transaction and storage fees are relatively low. The disadvantage, for the gold enthusiast who collects more for a hobby than investment, is simply that one cannot hold the gold in one’s hand. It is all accessed through accounts, rather like a bank account but usually much more securely and with little depreciation, unlike paper money.

Each of these methods of ownership of gold is different therefore, but each has the same common theme, ownership of gold!

So, whatever takes your fancy, buying gold in whatever form of gold is available for every enthusiast from shares in mines to gold held in trust to holding gold bars and gold coins in your hot little hand!

1 comment:

Anonymous said...

Have you used goldmoney? is it insured? How do you trust them?