Thursday, May 21, 2009

Investing in Gold

Investing in gold bullion can be done in a number of different ways. Each have their own particular advantages and which one an individual chooses will depend on a number of factors including is it an actual investment in gold, what are the additional costs such as shipping, insurance and storage going to be?

Gold investment can be done in the following ways:
Gold Stocks and Shares
Gold exchanged funds
Gold Coins and Bars
Gold rounds
Gold held on your behalf
Gold Exchanged Funds
Here the investment is not actually in gold but in a a fund which is apparently backed by gold. One has an account and 'buys' units that reflect the price of gold at any one time. Here the value of your asset is the price of gold rather than gold itself. You might ask what is the difference? Well the price of gold used is the gold futures price. This can be and usually is, very different to the actual value of gold. If you check out the value of gold bullion in the market place, such as from a dealer or even on an auction such as eBay, you will see that there is a marked difference to the value of gold there and the price of gold as reflected in an exchange traded fund. One is subject to potential manipulation of the price with the constant buying and selling of gold futures.

Gold Stocks & Shares
This covers investing in gold producers such as mineral companies, mints and even gold futures.

The investment here, however, does not mean that one is investing in gold. One is investing, rather, in the performance capabilities of the mining or investment company. Such companies may have other interests, investments in other companies for example, or mining other minerals. The management of these companies also play a part in the value or share price of the stock in such companies.

This means you are not so much investing in gold as in the management and administration of companies that may or may not mine gold exclusively. This also includes investing in gold futures. Here again there is no actual investment in gold, only in the prediction of what the gold price in terms of currency will be at some time in the future. In addition, there are other considerations to take into account. Taxes and fees for example. You also have to manage the shares, when to buy and when to sell.

Gold Coins and Bars

Gold coins are one of the most popular ways of accumulating gold for many people. Here you are actually investing in gold. This is not the cheapest way to invest in gold however and there is a high premium to pay for buying theme gold coins or even popular ones such as American Gold Eagles, Canadian Gold Maples or even the South African Krugerrands.

Gold coins such as these demand some care and attention. They cost money for shipping and sometimes storage. They take up space, especially of you have a lot of them and should be insured in case of theft etc.

Gold bars are a little better but still have the same premium, shipping and storage issues. The premium can be less as there is less work involved in the manufacture of gold bars as distinct to gold coins. You can even buy one ounce gold nuggets. Small blocks of gold which one can hoard and store in a squirrel like fashion. Even so gold is heavy and moving gold between some countries can pose problems with customs and security.

But investing in gold coins and bullion bars means that you are actually investing in real gold and not some representation of it. Gold also, in most countries, is tax free to buy and sell.

Gold Rounds

Gold rounds is a little better than gold coins or gold bullion bars in that the premium is usually lower. Yes you still have the same shipping and storage fees etc, but the overall cost to buy gold rounds is somewhat cheaper.

Gold rounds are like gold coins but are not manufactured as legal tender so have no currency value. They are produced purely and simply as a method of owning gold. They are generally the same size as most gold coins and usually pure .999 gold. They are usually one ounce of gold. They are easy buy, transport, store and sell.

Gold rounds are an excellent way of owning and investing in gold.

Owning Gold through a Custodian
owning gold through a custodian has all the advantages of owning gold and none of the disadvantages provided you have the right custodian.

Here you have a company, such as GoldMoney, that holds the gold for you obviating the need to handle shipping storage, insurance and security issues.

In addition whereas you might have to buy gold in specific amounts, here you can buy anywhere from the tiniest amount up to unlimited quantities. Also instead of waiting weeks for gold to be delivered, you can more or less buy it right away and have it instantly credited to your account.

This works by you opening an account and purchasing the gold which is stored in a bank vault. The ownership of the gold you have purchased is then transferred to you and your hold is represented by your account. The gold remains where it is where it is insured against the usual theft or loss by any other means. Audits are done on a regular basis to ensure that the quantity of gold in storage is fully accounted for.

You can also take delivery of your gold if required although this is hardly necessary. This can be in the form of 1000 gram gold bullion bars and it can be delivered to you in most countries around the world. The charge for this is nominal and the gold bars are 95.5 percent or over pure.

The value of your gold is reflected in the price of gold as it changes. One big advantage here is that you can buy gold on a regular basis simply by funding your account and buying the gold. The amount can be small or large.

You can also transfer any portion of gold from a gram or two up to any amount to another account holder through the system.

Opening an account is free at GoldMoney and, after the initial paperwork, can be funded right from the word go.

Accumulating and investing in gold this way has some important advantages. It is never moved from its storage facility. Such issues as shipping, storage security, buying and selling are not a problem anymore.

Buying gold on a regular basis means also that the price you pay for gold evens out over time and you retain the value of your investment. Investing on currency or stock and shares is subject to inflation and recessionary issues. Gold has never lost its value in over 50 years. You can still buy exactly the same value of commodity now as you could 50 years ago with an ounce of gold.

Each of these methods of gold investment is different but each has the same purpose. Owning gold.

The trick is to use that method that saves you the most while giving you the best options to investing in gold

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