Investments in Gold – Chapter 5: Investments in Physical Gold

By:

Updated: Mar 5, 2019, 13:14 GMT+00:00

This is chapter number 5 out of 15. Read the rest: Read Investments in Gold – Chapter 1: Introduction Read Investments in Gold – Chapter 2: Advantages of

Investments in Gold – Chapter 5: Investments in Physical Gold

This is chapter number 5 out of 15. Read the rest:

Read Investments in Gold – Chapter 1: Introduction
Read Investments in Gold – Chapter 2: Advantages of investing in Gold
Read Investments in Gold – Chapter 3: Disadvantages of investing in Gold
Read Investments in Gold – Chapter 4: Guidelines for Investing in Gold

Any savvy investor should have physical gold as part of their portfolio if they wish for an appropriately diversified portfolio. It is a universally accepted currency whose value cannot be eroded easily by artificial means as its supply is limited. Every prominent central bank in the world has a holding in gold. However gold should not be regarded as an investment by itself but rather as a means of saving or financial insurance. Just like the fact that you do not trade your insurance policy, investments in gold can not be traded but kept safe with a secured third party in preparation for that “rainy day”.

Only when the basic foundation in physical gold holdings have been realized in your portfolio should you than consider more speculative investments in other areas like equities, mutual funds or other speculative gold investments. The best way of doing this is to park your investment in form of gold bullions. This is also a good way of handing wealth down to the next generation in addition to wealth preservation.

The disadvantages of parking your investment in bullion bars are the usual charges incurred for storage and insurance. The market for gold bullions is also limited when it comes to liquidating them. This is because it is impractical to try to sell part of a kilo bar of precious metals like gold or platinum. The only way to go about this is to look for a large dealer and this curtails the market options available to the owner of the bullion bars.

If you wish to trade in physical precious metals more readily, you should opt for one ounce bullion coins rather than one ounce bullion wafers. This is because coins are Governments guaranteed whereas bullions are guaranteed by Refiners. In addition, bullion coins are easily recognizable and easy to sell and are readily available as they are mass produced. They also command a better premium. Old coins also have a much better premium. For example, British sovereign coins command a higher price than newly issued coins. Because coins are easily divisible and tradable, they have better premiums. Thus if you buy coins in quantity, the premium that you enjoy will be more that those of bullion bars of equivalent weight.

Before purchasing any coins, check the purity of the coin in question. Also authenticate the source of the coin. Like all purchases, shop around whether offline or online for the best possible price and premium for the weight of the coin regardless of the country of origin.

Take note that the market prices and premiums are always fluctuating and as such you should not make any long term assumption regarding the price. Also check if any taxes are applicable in your country for your investment in precious metals. For EU residents, all investments in gold are exempted from VAT.

About the Author

FX Empire Editorial Boardauthor

Table of Contents

Intro

Intro