Gold Traders: How to invest in Physical Gold?

In an article entitled, ‘Gold Prices Could Benefit from the Economic Winter’, by Goldnews.com, investment expert Ian Gordon was quoted as saying, “The winter of the cycle, which we call the payback period, is when the economy dies. It goes into a deflationary depression overcome by the overwhelming debt in the system that has built-up principally through autumn. When we get into winter, we get very defensive and we move into gold, which performs exceptionally well, as do Gold Mining stocks.” Over the years one has heard of gold traders touting it as a safe haven investment.

Even as trading in physical gold is the simplest form of such investment, people are often deterred because of the storage, transportation and insurance costs they have to incur. Yet it continues to be an extremely popular method of investment because it is a tangible asset, even as governments worldwide are debasing their currencies as they print money. Physical gold does not rely on any third party promises.

Physical Gold Options

When it comes to physical gold, the demand is always greater than the supply. In fact, the rarity of this metal is what makes it so precious and highly valued. In centuries of mining and trading, even now there is only about 140,000 tons of gold, above ground which comes out to be about 23 grams per person for the worldwide population.

Gold Bars: These come in various sizes, ranging from 50 grams to 400 ounces. They are priced according to the current spot gold prices with a small premium based on the manufacturing and handling of the metal. Such gold is highly liquid and can be sold at current gold prices all over the world, quite easily.

Bullion Coins: The most popular way of acquiring physical gold has been through the purchase of Bullion coins. Some extremely popular coins the world over are the American Eagle, South African Krugerrand, the Australian Gold Nugget, French Napolean, the British Sovereign, the Chinese Panda and the Canadian Maple Leaf. These coins are of defined weight and purity of gold content, valued according to the current spot gold prices. Government minted coins have assured weight and purity and are legal tender. The coins are available in 1oz or fractions of one troy ounce and are sold for a premium over the market price.

Numismatic Coins: Numismatic coins are coins that aesthetic and historic value because of their historical significance as currency or commemorative coins. Based on supply and demand, and the rarity and condition of the coin, numismatics could command very high values. They are not valued not only by weight and gold content, but also, the value determinants include grading, circulation, historical significance, rarity and condition of the coin. Some coins have been known to fetch millions of dollars because collectors are willing to invest as much in completing their collection.

Jewelry and Ornaments: Although they are a store of value, gold jewelry and ornaments have more cultural significance and aesthetic value. In countries like India (the largest consumer of gold in the world), it is a popular custom to buy gold jewelry and pass it on from generation to generation as a gift.

Gold coin enthusiasts, also invest in proof coins and commemorative coins, as they are government minted, high quality, modern numismatics. While buying physical gold, one has to be careful about the necessary evil that is counterfeit gold. Counterfeiting gold is a flourishing trade which anyone can encounter. Coins are copied or faked; other metals are mixed with gold to dilute its purity. As the gold traders gain experience in handling gold, they develop an uncanny sense of detecting counterfeits. This is why it is so important to use a reputable dealer who guarantees authenticity.