Investing in Gold

Gold has been a popular investment for centuries.  In modern markets there are many different ways for an individual to invest in gold. Outlined below are some of the most popular ways to invest in gold.

Gold Bars:
Gold bars are a popular way to buy gold. Gold bars are minted by many manufacturers and the purity of bold bars is .9995% or .9999% pure gold. In many countries you can buy gold bars ‘over the counter’ in banks. In the United States it is common to purchase from a bullion dealer or coin dealer. Gold bars are available in many sizes – 12.5 Kg, 1 Kg, 1 Ounce, etc. Since a kilogram is 32 ounces – it is worth roughly $32,000 (US) assuming gold prices at $1100. This is out of the reach of many buyers. Probably the most popular form of gold bar is the 1 Troy Ounce Bar – convenient because they are ‘affordable’, portable, and easily traded. A small amount of gold can purchase a large amount of goods. Of course, holding your own gold involves some risk. Another popular option is a ‘gold account’. More on that later.

Gold Coins:

Buying gold coins is an easy and popular way of owning gold. Many countries mint gold coins. These bullion coins are usually available as a whole or fractional portion of a troy ounce. The most popular gold bullion coins are the South African Krugerrand, and the Canadian Maple Leaf.

A Krugerrand is comprised of one troy ounce of pure gold and 2.826 grams of a copper alloy which is used to give the coins higher durability and to make them more resistant to scratching.

The Mapleleaf is 24 karat gold, unlike the 22 karat Krugerrand – although the gold content of each coin is the same. Canadian Mapleleaf coins are also available in 1/2 ouce, 1/4 ounce, and 1/10 ounce forms.

Bullion coins are sold for the spot gold price plus a premium above the spot price.

Exchange-traded Gold Funds:

Gold exchange traded funds, or ETF’s are a way to participate in the price changes in gold without the inconvenience of storing physical bars of gold. Typically a small commission and storage fee is charged for trading in gold ETFs. The annual expenses of the fund such as storage, insurance, and management fees are charged by selling a small amount of gold represented by each certificate, so the amount of gold in each certificate will gradually decline over time.

Certificates of Ownership:

A certificate of ownership can be held by gold investors, instead of storing the actual gold bullion. Gold certificates allow investors to buy and sell the security without the inconvenience associated with the transfer of actual physical gold.