How To Buy Gold Bullion

Once upon a time the only gold one could buy were the large 400 ounce gold bars or gold coins such as Krugerrand. Time change and nowadays there is a tremendous variety of gold bullion in the form of solid gold coins and bars from many mints and countries. You can now buy gold bullion bars as small as 1 gram or a 20th of a troy ounce. Of course buying gold in such small quantities is not very practical as the cost is so high. The mark up on tiny gold bars includes expensive packaging, certificates and the profit margin of the mint or dealer you are buying from.

What is Gold Bullion?

Gold bullion is either gold coins and bars of various types, sizes and weights. The bars come in a variety of sizes and weights from as small as one gram worth a few dollars to the one ounce, ten ounce, one hundred ounce and one thousand kilogram bars as well as the traditional 400 ounce bars or ingots used by large companies and institutions.

All gold, when bought comes at a price and a premium over the spot price (market price), and this changes day by day. The smaller the bar or coin, the larger the premium. There is a specific cost to fabricating gold and that does not change very much. Of course the fabrication costs for gold coins is higher than bars as they are struck to a much better finish. Gold bullion coins provide hedges against currency debasement and devaluation. Yet when investors search the Internet for information about gold investments, they often are confused by the many sites that promote numismatic and collector coins, which sell at high premiums to their gold content. Gold bullion coins, on the other hand, sell at small premiums over the value of their gold content and make the best gold investments.

What is the best Gold Bullion to Buy?

Americans regained the "right" to own gold bullion on December 31, 1974. Previously, since President Roosevelt's 1933 "gold call-in," Americans could own only numismatic coins whose prices were determined more by collector interest than by the value of their gold content. Numismatic and collector coins sell at huge markups, sometimes at prices many times the value of their gold content. Bullion gold coins sell at small markups over the value of their gold content. Today, American Gold Eagles are the best selling gold bullion coins in the world. South African Krugerrands, although no longer imported into the U.S. for the investment market, remain immensely popular, with thousands of them trading daily in the U.S. Krugerrands sell at much smaller premiums over spot than Gold Eagles. Still, Gold Eagles are the best selling gold bullion coins in the world, as millions of investors have made them their preferred gold investment. When buying gold bullion it is better to buy the largest size bars or coins you can afford. The larger the gold bars or coins you buy are, the closer to the actual value of gold you are likely to get for your money, with a proportionately less margin to pay. There will always be some margin to pay but this can be reduced down to virtually 1 or 2 percent with the larger bars. Of course you do have a rising scale of storage and security to attend to so there is a balance to be drawn. If you can afford the 400 ounce bars then it is likely you can afford the transport and storage fees associated with such a large value of gold. Most bars of such size are generally kept in bank vaults. If you purchase a 1 gram bar then you will likely pay twice the value of the actual gold. However your security or storage problems will be minor. It will fit in your pocket or could be hidden in your house and virtually impossible to find.

How to Buy Gold Bullion

Basically it starts with, how much are you going to spend? Then you can check out the various dealers and mints to see what is on offer. Some things to keep in mind are: Pick an established dealer or mint. It is not recommended you purchase off eBay unless you know the dealer is established and has an excellent feedback record a mile long. The Perth Mint is an excellent place to purchase Australian gold bullion. Get the current value of gold per ounce or gram in USD. This is the standard used. Compare this to the price of the bullion bars on offer. Pick that bar or those bars that more closely match your spending budget and offer the lowest margins. Ask yourself, "do you really need a certificate?" This is valuable if you later need or want to resell the bar. But, with the smaller bars, unless you are prepared to hold onto it for some considerable time, you are unlikely to get your money back due to the margin you have to pay unless the value of gold rises remarkably. Once you have chosen what you want, you simply pay for the bar and await its delivery. Most people collect gold bullion as a way if preserving or increasing their asset base. Some collect it just as a rewarding hobby. Whatever your reason, if you are thinking you would like to buy gold then the above information will assist you to understand how to buy gold bullion.

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