Where to Begin in Buying Gold

OK, so you are sold that Jual Emas would be a wise move for you, especially in today’s economy. However, where exactly to begin? Should you buy gold coins? Or perhaps gold futures or gold stocks? What about gold bars? Is that actually feasible? .

Experts concur that owning gold, in any of its forms, make it bars, coins, stocks, options, or futures could provide the basis to the accumulation of genuine wealth. And there is no better time to begin that accumulation than the current.

Gold Coins

Let us start the conversation with gold coins. Are they the same? No. There are essentially two different types: silver coins and numismatic coins. Bullion coins are priced depending on their fine weight, and a small premium based on supply and demand. To put it differently, you’re paying mainly to the gold content of this coin. The best example of this sort of coin would be the Krugerrand. Other examples are that the Canadian Gold Maple Leaf, the Australian Gold Nugget, the British Sovereign, the American Gold Eagle and the American Buffalo.

Numismatic gold coins, on the other hand, are priced mainly by supply and demand according to condition and rarity. They frequently only contain about 90% gold. Therefore, if your aim is to accumulate the metal, stick with the bullion coins mentioned above. Their prices will soon rise and drop directly in keeping with the cost of gold.

Gold Bullion

Buying gold bars is the most traditional way of purchasing gold, if perhaps not the most convenient. The bars vary in weight from 400 Troy ounces all the way down to 10 grams. Owning gold bars is trendy and they do carry less of a premium than gold coins (price less), however they do come with a bit of risk attached – forgery. Some unscrupulous traders insert a tungsten-filled cavity into the pub that may not be detected during the assay.

The best method to avoid this risk is to purchase and sell your gold bars throughout the London bullion market and save your gold in a LBMA-recognized vault. In doing this “chain of custody” so-to-speak stays intact along with your purchase is assured. However, when the gold is kept in a personal vault outside of this system then it has to be re-assayed upon introduction back into the system.

Gold Exchange-Traded Products

Gold exchange-traded products signify a more convenient way to buy gold because of eliminating the hassle of needing to store the physical bars. But, as it happens, there are dangers with this also. The danger comes from the fact that a small commission is charged for trading in golden ETPs and a tiny yearly storage fee is billed. The annual costs of the fund like storage, insurance, and management fees are billed by promoting a small amount of gold represented by each certification, so the amount of gold in every certification will slowly diminish over time.

Gold Stocks, Options, and Futures

One can, of course, purchase the stock of a gold mining company. This is a very risky way to go as what you’re doing is gambling on the viability of this company to find and mine. Mines are businesses and are susceptible to problems like flooding, subsidence and structural failure, as well as mismanagement, theft and corruption. Such factors can lower the share costs of mining companies. The benefits could be great if you win, however it is far from a sure thing.

Gold futures on the other hand are a pure gold price drama. A futures contract gives you the right to receive a set amount of gold at a date later on for a particular price (normally set well before delivery). Most futures contracts never actually lead to delivery of the gold. One only sells an equivalent number of contracts (hopefully at a higher price) and thus neutralizes the position. Your gain is the difference between what you’ve accumulated on the selling vs what you had to place up for the purchase (should you’re bearish on the purchase price of gold you can of course sell and buy back later to close your position in hopefully a lower price). Because of the quantities of gold in play (and how you simply need to put up a mere fraction of their overall value) substantial profits could be had. But, regrettably, substantial losses may be had as well.

Gold options provide you with the right to purchase (or sell) one or more gold futures contracts at any time in the future at a cost. Just as with futures, one simply neutralizes one’s position before expiration in order to not wake up with a truckload of golden spilled in your lawn in the middle of night using an astronomical bill sailed to front door.

About The Author