Gold bullion offers investors the security of an investment in gold in a simplified, easy-to-trade format.
As the financial and credit markets continue to be in turmoil, investors are turning to gold as a safe investment. Historically, gold has performed well in tough economies, and the latest financial crisis has been no exception as gold has climbed while stocks and other investments continue to struggle well below the highs they reached in the mid 2000s.
Gold bullion is the choice of many beginning gold investors. Gold bullion is the purest form of gold minted in the form of bars or ingots. Because the metal of the coin or ingot is (with a few notable exceptions) 99.9 percent gold, the value of the bars or ingot is largely based upon the current value of the underlying commodity;for our purposes, gold.
There are three main factors that determine the value of bullion: weight, purity and metal. Weight is usually expressed in troy ounces, with one troy ounce equaling 31 grams. Purity tends to be 99.9 percent (100 percent is impossible) but it can vary in some countries. With regard to metal, the underlying value of the metal the bullion is made out, such as silver, gold or platinum, has a big impact on the value of the bullion.
Nations and mints also manufacture gold bullion coins. Bullion coins are somewhat different than bars or ingots of gold bullion in that their value may also be affected by the collector’s value of the coin. Old or rare bullion coins may have value above the underlying price of the metal.
Some examples of gold bullion coins include:
American Gold Eagles — The U.S. government began minting these in 1997. They’re 91.67 percent pure and are stamped with the emblem of the U.S., the bald eagle.
South African Krugerands — An early form of gold bullion issued by the South African government.
Chinese Gold Pandas — These have been issued in a variety of sizes including a limited edition minting of 20 eight kg coins.
Canadian Gold Maples — These coins are 99.9 percent pure gold and have been issued in a variety of sizes.
Buying gold bullion is stamp and value-added tax free in both Great Britain and the EuroZone, making it an attractive investment for people trying to avoid the onerous taxes of Europe.
When investing in gold bullion, investors should try to find a storage facility that offers competitive pricing for storage if they don’t intend to accept delivery of the coins. High storage costs can eat into the value of the investment. A cost of one percent of the value of the gold per annum is a reasonable rate.
For investors seeking a safe harbor in the impending economic storm, gold bullion offers a time-tested investment they can trust to both protect and promote their wealth in lean times. Few other investments have the “sure thing” cachet that gold can offer, and the ease of purchase and trade.
