Gold has always fascinated human beings not only because of its beauty but for its value as a commodity. Gold is also durable which is why it is made into jewellery and dental crowns. Its versatility has made it a most sought-after metal in the world.
These days, individuals buy gold bullion for a number of reasons. For some, gold is a sentimental material for others it is an important investment strategy. Even though gold has a long-lasting value that is second to none, most buyers have the same common concerns when it comes to buying gold. When you buy gold bullion to diversify your investment portfolio, there are a number of factors to consider.
The good thing is that you have three ways to invest your gold. You could buy gold bullion bricks or coins, If you have the money you can buy a stake in a gold mining company, Whatever you do or however you decide to invest in gold, you need to make sure that your gold investment products meet your needs and have excellent returns. However, before you buy gold bullion, you should consider a number of crucial factors.
Gold had the potential to be a worthwhile investment. If you are new to the gold market, you should probably share the same concerns that thousands of gold investors might have:
Is gold a valuable asset?
Many people who buy gold bullion often do so to diversify their investment portfolios which may include the stock market trades, property investment. The main concern for an investor looking to buy gold is whether they are assured to get a significant Return on investment. Thankfully, gold has intrinsic value. It has been considered as a safe haven investment by many It is the kind of asset that holds steady in the face of turmoil and the drop in other investment asset classes. In a lot of cases, the price of gold will go on increasing as other investments drop
This consistency and expected increase in value make gold a safe and worthwhile investment to reduce risk. Whether you buy gold bullion from gold dealers or refineries you aren’t likely to see significant price drops.
What About Volatility?
Even though gold is considered safe, it is not immune to price swings. Like other commodities, the price of gold does not go up steadily. Sometimes it goes down only to go down later and fluctuate because of various factors. Right now this precious metal is double what it was a decade ago.
The lowest gold price was $20.43 which is what the government paid individuals who surrendered their gold in 1933 when the gold standard ended. Individuals were only allowed to own gold privately in 1974. Over the years, the value of gold has consistently risen, even when inflation was at its worst. Gold has endured the worst recessions, political upheavals, wars, and economic policies and has come out even stronger.
When you buy gold bullion you can expect to pay a premium price over spot.
Getting your gold from gold dealers generally means that you will have to pay a premium on top of the spot price. The spot price is the one you will see on the commodities exchange. You may pay more for gold bullion because of the added costs and fees a dealer may add. These are what make up premium fees. Premiums can also be applied when you sell your gold bullion to a dealer.
Premiums generally consist of dealer fees, manufacturing costs, and distribution expenses of the gold dealer. Premiums also apply when selling gold to a dealer, as they will pay less than the spot price for your gold. Before purchasing gold from a dealer, be sure to do thorough research and find more information on the expected premium payment.
However, the value gold can gain over time easily outweighs the high initial investment cost.
Gold Coins Vs. Gold Bars
Investors tend to favor two forms of gold: coins and bars. Gold coins are popular among collectors and tend to weigh less than one ounce. Some of the most popular gold coins include:
- The American Eagle from the U.S. Mint
- The Canadian Gold Maple Leaf
- The Krugerrand
Another popular option is gold bars. Most investors prefer to purchase bars that weigh one kilogram or less; however, there are 100-ounce bars available for those looking for a more significant investment. Larger gold bars are the preferred product for financial institutions, exchange-traded funds, and central banks.
One advantage bars have over coins is that you’re much less likely to misplace a big bar than you are a small coin. However, you can often buy coins in higher quantities all at once, allowing you to sell however much you like when it’s advantageous to do so. Whichever you choose, you’re making a wise investment.