Invest In Gold
Gold has stood the test of time as a dependable store of value.
Gold benefits from diverse sources of demand: as an investment, a reserve asset, jewellery, and a technology component. It is highly liquid, no one’s liability, carries no credit risk, and is scarce, historically preserving its value over time.
Investors gravitate to gold bullion bars due to their low premiums over spot price and ease of resale
There are a few different ways to invest in gold:
- Buying shares in gold companies
- Investing in gold exchange-traded funds
- Buy gold coins
- Buy bullion bars
An investment in gold coins has a number of advantages, they can help if you want to invest internationally, and as a hedge against currency. It is very easy to trade in coins and capital gains tax is not levied on transactions, and they will keep their dollar value until you want to exchange them.
However, unlike other types of investments, gold coins do not give you an income. An investment in shares, for example, will yield dividends. If you don’t need an income, coins can be the ultimate insurance policy in the event of catastrophe.
There are two types of gold coins:
- Collectible coins
- Medallion coins
Collectable coins include old and modern coins whose value depend more on rarity and condition than the actual gold content. While the price of collectable coins tends to be more steady over time, some have performed extremely well – helped by the fact that no VAT is payable.
Collectable coins can be expensive – up to 500% more than the metal value. If coins trade at such a premium over the gold price, it is usually because of the rarity. Demand will determine the price for limited edition coins and coins no longer in circulation.
Medallions coins do not have a legal tender value. These coins can be minted by any accredited mint but have no legal tender value. Buying these coins is like buying bullion gold or silver. VAT is charged on dealing in these coins.
Bullion coins – like Krugerrands and the Canadian Maple Leaf coin – track the gold price.
The price of these coins can be quite volatile at times, as it also has to take currency movement into account. Price generally is between 2% and 5% more than the value of the gold it contains.
Bullion Coins are valued by the weight of the precious metal, which fluctuates based on its daily price. These coins are sold through dealers or sold directly to collectors by the mint
Proof Coins – are the finest quality of coin produced by the Mint. The term proof refers to the coin’s finish. Proof blanks are specially treated, hand-polished, and cleaned to ensure high-quality strikes.
The blanks are then fed into presses fitted with specially polished dies and struck at least twice, which gives the coin a frosted, sculpted foreground for a glamorous shine; defined, intricate design and mirror-like background.
The coins are then carefully packaged encased in a protective capsule to showcase and preserve their exceptional finish. They come with an official Certificate of Authenticity.
Proof coins have a legal tender value. Legal tender is officially defined as anything recognised by law – the coins or banknotes that must be accepted if offered in payment of a debt or meet a financial obligation, including tax payments, contracts, and legal fines or damages. A creditor is legally obligated to accept legal tender toward repayment of a debt.
However, the official definition of legal tender refers to very specific conditions surrounding the repayment of debt, so has little to do with which forms of payment can be used in everyday transactions.
For example, the official definition of legal tender exclusively refers to coins and banknotes. Payment via credit card therefore isn’t considered as legal tender, yet this is a widely accepted and extremely common form of payment.
Gold Bars (Gold Bullion)
A gold bar, also called gold bullion or gold ingot, is a quantity of refined metallic gold of any shape that is made by a bar producer meeting standard conditions of manufacture, labeling, and record keeping.
Larger gold bars that are produced by pouring the molten metal into molds are called ingots. Smaller bars may be manufactured by minting or stamping from appropriately rolled gold sheets.
The standard gold bar held as gold reserves by central banks and traded among bullion dealers is the 400-troy-ounce (12.4-kilogram; 438.9-ounce) Good Delivery gold bar.
The kilobar, which is 1,000 grams (32.15 troy ounces) in mass, and a 100 troy ounce gold bar are the bars that are more manageable and are used extensively for trading and investment.
The premium on these bars when traded is very low over the spot value of the gold, making it ideal for small transfers between banks and traders.
Most kilobars are flat, although some investors, particularly in Europe, prefer the brick shape.
Asian markets differ in that they prefer gram gold bars as opposed to troy-ounce measurements. Popular sizes in the Asian region include 10 grams, 100 grams and 1,000 gram bars.
How much to invest in gold?
Most financial advisors say a maximum of 10% to 15% of your investments should be in gold (two-thirds in bullion coins and the rest in collectables). Some investment experts don’t think exposure of more than 5% is prudent.
The biggest risk is a collapse in the gold price. The precious metal is not a steady climber.
Following the great gold bull market of the 1970s, gold peaked in 1980 and then slumped for 20 years before its latest upturn. Adjusted for inflation, it is still 30% below levels reached 30 years ago.
RDL only deals with numismatists who are professional dealers, advanced in the study of money, consulted by historians, museum curators, and archaeologists.