I often look for gold to buy as an ornament specially when there is some festivity around. Be it a marriage in a family or some special event or festival. I also have the love for this yellow metal for two reasons: first its jewellery form looks quite attractive and second the most important reason other metals besides gold causes allergic reaction to my body. But you will wonder why always I opt to buy Gold only. It is my grandmother advice that investment in gold is always profitable. She had gold coins and jewellery along with rold gold watches which she used to proudly display to us. It is seen that Gold is all time favourite and has become a business for both government and non- government agencies.
With digital technology upcoming in every sphere of life and most of us having transactions done through online E wallets and Credit cards we no more see money as tangible object. So what about gold? With falling prices of gold lately; will it bring down the investment choices towards gold?
- Since time immemorial Gold has been used as money and has been a relative standard for currency equivalents specific to economic regions or countries.
- Many European countries implemented gold standards in late 19th century until these were temporarily suspended in the financial crises involving World War I.
- After World War II, the Bretton Woods system attached the United States dollar to gold at a rate of US$35 per troy ounce. The system existed until the 1971 Nixon Shock, when the US unilaterally suspended the direct convertibility of the United States dollar to gold and made the transition to a fiat currency system. The last currency to be divorced from gold was the Swiss Franc in 2000. (Wikipedia)
Few Latest Facts
- The price of gold was up 20 percent since the beginning of 2011 and went near $1,900 per ounce. Today’s gold rate in the US Market price per ounce is $1168.68 per ounce (at the time of writing this post).
- Gold is priced in dollars, and goes up when the American currency goes up, investors mark down the yellow metal accordingly.
- The dollar is rising because of the revival of the American economy bringing in the prospect of higher interest rates. Higher interest rates increase the opportunity cost of holding zero-yield assets.
- China has raised its gold reserves a bit. But its bullion hoard is still less as a share of total reserves.
Will investors stop buying Gold
- In times of financial crisis, investors turn to gold exchange-traded funds, or ETFs, to cash in when on gold’s rise. And Gold rates do fluctuate from time to time.
- Going to a Gold party in America you can have your jewellery appraised and get paid cash on the spot. Even in countries like India the banks started programs where people can buy gold in form of coins which are an investment source. Banks and other private agencies take gold from the buyers serving as liquidity with interest.
- The price of gold coins has tracked the recent decline in the price of gold, as well. But as prices fluctuate wildly and Gold coins aren’t meant for trading and can be held for minimum of three years.
- Gold Coins are the best to invest. Followed by jewellery and then Gold Bars.
Gold Coins- Buying and Selling
If you’re looking at gold coins as a true “investment,” consider the following:
- Gold bullion coins sell in millions each year and are a good form of investment.
- American Eagle and Canadian Maple Leaf gold coins have high gold purity and are easily bought and sold through precious metals dealers.
- American Eagle coins can even be put into individual retirement accounts, or IRAs.
- Buy 1-ounce coins. American Eagle coins are issued in four denominations: 1-ounce, half-ounce, one-quarter ounce and one-tenth ounce. But the fractional coins carry higher premiums above spot prices than the 1-ounce versions. Best to stick with 1-ounce coins.
- Avoid rare coins. Rare coins require more diligence and expertise when buying them. Two coins may look alike but have completely different grades. This difference can add up to thousands of dollars. You should hire a professional grading service and get a certificate of authenticity when buying rare coins — a hassle for most investors.
- Widely used gold coins also are easier to sell, unlike the South African Krugerrand and the Austrian Vienna Philharmonic gold coins. These coins are mostly bought and sold outside the U.S.
- To compete with the purer Maple Leaf, the U.S. Mint introduced a new gold bullion coin, the American Buffalo, in 2006. Its 24 karats represent the purest coin ever offered by the U.S. Mint. But it’s not bought and sold as frequently as the American Eagle, and it’s more expensive.
- Gold bars are even costlier. They typically trade in 10-ounce amounts, but selling can be a chore. These bars can be expensive to ship back to the dealer.
- If you buy gold coins, store your American Eagles or Canadian Maple Leafs in a safety deposit box or a home safe rather than with a dealer. Physical possession is best to avoid dealer scams.
- It is better to use a bank wire or cashier’s check to pay for the coins. Dealers don’t take credit cards for gold purchases. They may not accept orders unless they have the cash in hand first.
- Selling coins also means shipping them back to dealers by packing them in coin protectors wrapped in bubble wrap. To track the package, send it via registered mail or Express Mail, or use a service such as FedEx or UPS. The coins should also be insured for their full value.
- Compare dealer prices. Aside from the proof version, the U.S. Mint doesn’t sell American Eagle gold coins directly. But there is a dealer location tool on the Mint’s website. Comparing prices among dealers is easy because coins sell at a premium above gold’s spot price, or its delivery price as a commodity. You can find the spot price on precious metals exchange sites such as Monex.com or Kitco.com.
- Avoid paying more than 5 percent premiums for gold bullion coins and do not buy gold on eBay because you can get trapped in a bidding war.
Inflation, Deflation, Stock Market Weakness and currency problem will come and go and in these financial uncertainties, it is the investment in gold coins and bullion that can make sense. Do your homework before buying and selling Gold Coins and remember the proverb “All the glitters is not Gold” to avoid any kind of scam.