Gold As a Form of Investment

What should you pay attention to when buying gold? Advantages of gold for investment. Possibilities for both storage and resale

Ever since the end of the prehistoric era, gold has been cherished as an investment because even small amounts can be very valuable, especially if they have a high level of purity. The shiny precious metal has proven itself over millennia, as a crisis-proof form of capital that is easy to store and to transport. Its properties as a sought-after means of exchange and payment have been maintained to this day. For many investors, an investment in gold represents a security reserve.
Those who would like to divest their assets in gold are spoiled for choice because this precious metal is available in many forms. The market offers gold coins, gold granules and reclaimed gold as well as gold bullion in its various forms as classic ingots, coins or combi-bars.

What to Invest In – Gold Coins or Gold Bars?

Many investors understandably ask themselves which form of gold they should choose when entering their capital into the gold market. Proportionally speaking, larger bullion gold is essentially much more cost-effective than smaller coins. Their numerous weight classes offer more flexibility when buying and selling, too. Gold bars – or ingots – are suitable for both beginners and experienced investors. Indeed, they are usually inexpensive to own in marketable denominations. They can be easily exchanged and are characterised by a low spread (the difference between buying and selling prices). By contrast, gold coinage usually has a better look which is why they are more interesting to collectors when compared to ingots.

Popular Gold Coins for Investors

Many private investors and collectors like gold coins that have a high fineness of 999/1000 or even more. Depending on the product, they are available in denominations of 1/20 of an ounce to 20 ounces or from 1 gram to 10 kilograms. A popular benchmark standard is the troy ounce of gold which weighs 31.1035 grams. Bullion coins are generally appreciated because they usually come with a very detailed designed motif and a high quality of embossing.
Well-Known International Gold Bullion Coins:

Name of the gold coin fineness country
American Eagle 916.7/1000 USA
Birds of Paradise 999.9/1000 Australia
Britannia 999.9/1000 United Kingdom
China Panda 999.0/1000 China
Goldmark 999.0/1000 Germany
Helvetia 900.0/1000 Switzerland
Krugerrand 916.7/1000 South Africa
Lunar Series II 999.9/1000 Australia
Maple Leaf 999.9/1000 Canada
Nugget Kangaroo 999.9/1000 Australia
Vienna Philharmonic 999.9/1000 Austria

 

Gold Bars for Investors

With gold bars mostly offered in classic gram sizes which range from a single gram to one kilogram, there are gold bars of one-tenth of an ounce through to 400 ounces that are available, too. Attractive investment sizes tend to range from 100 grams to 1 kilogram and 400-ounce ingots. Bullion bars up to a weight of 250 grams are usually made of gold sheet. Larger units are commonly cast, although there are exceptions. For investors, the fine weight of your gold investment will play a crucial role, since the gold content involved should make up at least 99.9 per cent of the bullion.
In addition to classic gold ingots, so-called coin bars are also available. These come furnished with elaborate designs and usually have an imprinted face value on them which is why they are often classified as gold coins. Kinebar gold ingots have another special feature. Although their front shows the face of a common ingot, the back is decorated with a two-dimensional security hologram. Also of interest to investors are table bars, sometimes referred to as combi-bars. Their appearance is similar to a chocolate bar because they consist of several, interconnected single-gram pieces. These have preset breaking points so that they can be separated if necessary, meaning that parts of the block can be sold if wanted.
Well-Known Swiss and International Manufacturers of Gold Bars:

  • Argor-Heraeus SA, Switzerland
  • C.Hafner GmbH + Co. KG, Germany
  • Heimerle + Meule GmbH, Germany
  • Heraeus Holding GmbH, Germany
  • Johnson Matthey Ltd, Canada
  • Austrian Mint, Austria
  • PAMP S.A., Switzerland
  • The Perth Mint, Australia
  • Umicore AG & Co. KG, Belgium
  • Valcambi SA, Switzerland

What Should You Look Out For When Buying Gold?

When purchasing gold bars, it is advisable to pay attention to the authenticity and LBMA certification of the London Bullion Market Association. This certification guarantees a purity of at least 995/1000 in so-called ‘good delivery’ bars (around 400 ounces). Indeed, even when it comes to the purchase of gold coins, their authenticity is crucial for a true valuation. Coins with popular motifs are usually offered at higher prices, which makes them more likely to be counterfeited. Again, it is advisable to pay attention to the authenticity of bullion coins. That is why many bullion coins – such as the Canadian Maple Leaf, for example – are supplied with anti-counterfeiting features.
Special collector edition and commemorative coins and bars are only partially suited to a role as an investment. In addition to their financial worth as gold, their value is mainly based on collectability, which is why high prices are demanded despite the fact that they tend to appeal to a limited group of buyers. Even gold jewellery is no alternative to classic investment gold since, as a rule, the cost of jewellery frequently exceeds its pure gold value. When it comes to selling, dramatic value losses must consequently be expected.

Where to Buy Gold?

As a precious metal, gold is safest when bought from reputable dealers, such as our partner Echtgeld Ltd . Such brokers usually offer a larger selection at cheaper prices than, for example, banks do. Almost all reputable gold dealers also sell their inventory via online shops these days.

What Influences the Price of Gold?

The price trend of precious metals largely depends on the level of current demand and supply. In addition, the price of gold is influenced by economic developments and global crises, too. The jewellery making industry, as the largest consumer of gold, also plays a decisive role in rising gold prices.

Where Should You Physically Store Precious Metals?

Gold, in the form of coins or bars, can be stored in your own safe at home. An essential element of this approach would be a good security system and adequate insurance. An alternative to this is a bank deposit box, the contents of which are only known to the user. In the event of a theft of the contents of the box, however, the renter must provide proof of the box’s contents. The same applies following a break-in at home, as well, incidentally. At banks, a third, or master, key also usually remains with the establishment. If there is an expropriation or insolvency of private or corporate capital, then the bankruptcy administrator will often be able to gain access to a deposit box held at a bank.
The situation is different with private storage facilities run in a secure vault that is outside of the banking system. In such vaults and safes, assets can be kept in a secure and discreet environment.

-> Learn more about bank-independent deposit boxes in Switzerland here.

Conclusion: Larger Denominations Are Better Suited For Investments

Gold bullion investment in coins or bars is preferable. As a rule, the larger the investment that is made, the lower the additional costs will be. Investors should be mindful of both the fineness and the authenticity of gold when buying their precious metal so there will be no unwelcome surprises at a future sale. In addition, it is advisable to think about where the physical gold will be held at an early stage: in a private safe, in a bank’s deposit box or in a bank-independent security facility.

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