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Monday, November 17, 2008

Why Buy Gold

Why buy gold I hear some people ask. Gold is transitory and the price will always go down again!

In fact gold is not transitory. It has been around and used by man for thousands of years as decoration, jewelry and also, importantly, as a medium of exchange and preserving assets. It may drop temporarily but it always goes up again and is now worth more dollars than ever before.

Why Buy Gold
Why buy gold indeed! Nations and governments come and go. Currencies come and go. Economic conditions come and go. Inflation and recessions all come and go. Various bartering systems come and go. Stocks and shares and the ancillaries to those, futures etc, all come and go. But gold lives on and persists throughout the centuries and continues to be a stable resource for man.

Additionally gold does not tarnish, gold is welcome anywhere in the world. You can buy gold and sell it. Keeping assets in the bank means one gets a paltry interest rate (if that) which is generally eaten up by bank charges and inflation as each year the dollar is worth less than the year before. But gold. Ah! Gold does not hit you with bank charges and is not subject to inflation. Gold does not wear out and is not subject (mostly) to taxes. No. Gold is a stable asset that keeps its purchasing power.

In fact, regardless of the current economic situation, gold remains ... as good as gold! So the time to buy gold is always now, regardless of when now is. The time to sell gold is ... never! And as to how much gold to buy? Well, as much as you can possibly lay your hands on!

Gold Price
The gold price fluctuates daily, even hourly. The live gold price is dependent on market forces, upon the economic conditions and peoples perception of what is happening economically and how the economy affects them. When the economy is unstable, people look for alternatives such as precious metals like gold and silver. The price of gold moves up and down with these apprehensions. The current price of gold to day reflects peoples moods and expectations. Since the economy has been unstable for so long and there is no likely hood of stability any time soon, more and more people are turning to gold.

Gold is undervalued even now. It takes many more dollars to buy an ounce of gold now than it did 30 years ago although you can still by the same products now as you did years ago. Gold has not changed. Only the purchasing power of the dollar which has gone down over 95 percent since 1910. Yet an ounce of gold will still buy now what it did in 1910. That tells you that you have much more chance keeping your assets if you buy gold than by sticking your money in the bank.

In the short term gold prices may change by the minute. But in the long term the price of gold is on a steady uptrend and looks set to continue as more dollars are printed and the purchasing power of becomes less and less.

Gold, in short, is a safe haven for assets.
A Short History of Gold
The historical gold price chart over the past few years shows that gold has been on a long term upward trend. There are peaks and troughs and, of course, who can forget the major spike in gold in 1980 when it hit the high 800s. But over the past 30 year gold price history, the trend has been essentially up and looks like continuing as the value of the currency it is set to continues to diminish in value..

The value of the gold, of course is not changing. One can still buy the same value of goods and services with one ounce of gold as one could 30 years ago. But the value of the dollar has plummeted and it takes a lot more dollars to by those same goods and services than it did 30 years ago. The gold has not changed. One ounce of gold is still one ounce of gold. But the dollar has changed and the price of gold reflects that.

Buy Gold Coins
Some of the best places to buy gold coins are of course gold mints, gold dealers, gold shops and eBay. From these one buys gold retail and one can also buy gold wholesale. The main trick when buying gold is to keep the premium over the spot price of gold to a minimum. This is difficult with gold coins as the manufacturing costs are high and the mint and dealer want their profits.

The advantages with buying gold coins is that they are easy to buy, store and transport. Also to sell. You can sell gold coins anywhere in the world. Gold coins are easier to sell than bars. Dealers who buy bars will want to assay the bar fist and this may require sending the bar off, if the dealer is online, which can be a bit of a security risk.

The disadvantage, of course, is the price you pay for gold coins. The premium is higher than bars and can be up to double the price of gold for small coins such as the one tenth ounce for example. This means it is going to take a long time to recoup the value of the gold.

What you do will depend largely on the reason why you buy gold coins. It may be you enjoy just collecting certain types of gold coins, or for convenience if you travel a lot and need to be able to convert gold into money quickly.

Buy Gold Bullion
Out of all the ways to buy gold, the best buy is gold bullion. You can buy gold online either as gold coins or gold bars or even share in actual gold pooled by buying gold from GoldMoney.com, probably one of the cheapest and most secure ways to buy gold. You can also buy direct from Mints or dealers and all are equally valid ways of buying gold. Each method has its advantages and disadvantages..

To buy gold bullion in the form of coins and bars means you will have to pay a premium. How much this premium will be depends on the coins and bars you buy. The smaller the bar or coin in weight the higher the premium per ounce. The higher the bar or bigger the coin the less premium per ounce you pay. The premium itself is stable as the fabrication and other associated costs per coin or bar stay the same.

One way of not having to pay a heavy premium is to buy gold from goldmoney.com. Here the gold is stored in vaults and you can buy any amount of that gold. This system guarantees that you actually own gold, not shares in gold and your account details and balance will reflect that holding. One of the main advantages here is that the premium and fees are so incredibly low. Instead of paying vast sums over the spot price of gold you simply pay a small storage fee that amounts to less than one percent per year and a management fee of one quarter of one percent. This must make it the cheapest gold around. The system is fully transparent and you can see the bar count and audits on the website.

The only possible disadvantages are the costs associated with wire transfers in and out of the account in some cases. But that can be disadvantage with any online purchase of gold.

Buy Gold, Pure Gold
Bu gold, pure gold! That is the catch cry but which gold? Canadian Maple leaf, 24k American Gold Buffalo Coin, Krugerrands,, whatever gold coin you buy it should be 99.99 fine gold or 999.99 pure gold. Sometimes you will find coins that have a lesser quantity of gold in them. Some mints are now offering gold coins as 22 carat instead of the 24 carat. These may say they are 99.99 fine gold and of course the gold contained within the coin IS 99.99 fine gold. Any gold anywhere is 99.99 fine gold. But if it is alloyed or mixed with another or other metals then it is not a pure gold product. Look at the Karat. Is it 22 Karat gold? Or 24K gold? The 24K gold is pure gold. The 22k gold is not all gold. It may be advertised a pure fine gold and the gold itself would be but it is not all solid gold..

When you buy gold coins always, always check the karat and ensure it is 24 karat gold as well as being 99.99 percent gold.

Buy Gold Eagles
American Gold Eagle Coins are perhaps one of the most popular of the gold coins and are official legal tender in the USA.

They are considered a beautiful gold coin. the $20 Double-Eagle gold coins minted from 1907 to 1933 has the graceful Striding Liberty design inspired by the Augustus Saint-Gaudens on the obverse and the reverse of the coin displays a nest of American Eagles.

All American Eagles ere struck with 91.67% (22 Karat) fine gold and the total gold weight is stamped on the reverse of the coin.

One interesting aspect of American Eagle Gold Coins is that the weight, gold content and purity are all guaranteed by the US Government.

You can buy American Eagle gold coins from most coin dealers as well as on eBay and the American Gold Eagle and are likely one of the most traded of gold coins in the US.

Buy Gold Maples
The Canadian Gold Maple has been said to be the most beautiful gold coin in the world. It is certainly one of the best being a pure .9999 (24 karat) gold coin with no alloys added.

The Canadian Gold Maple Leaf Coins are among the purest gold coins available then.

All Canadian Maple Leaf Gold Coins have a bust of Queen Elizabeth II, on the obverse designed by Arnold Machin and on the reverse (tails or flip side) we have the famous Canadian Maple Leaf symbol.

Canadian Maple Leaf gold coins are official legal tender in Canada and can be bought from most of the major coin dealers.

Buy Gold Krugerrands
Everyone has heard of Krugerrand Gold Coins. They have been made famous in exciting and adventurous movies.

In fact the Krugerrand was named after Stephanus Johannes Paul Kruger, a former South African President and well known person involved in the formation of the South African Republic. His head is on the obverse, or "heads" side of the coin

The Krugerrand was the first gold coin to contain one ounce of fine gold. These days you can also get half ounce, quarter ounce and even one tenth ounce Krugerrands.

If you want to buy gold Krugerrands, they are generally available from most coin dealers, at a premium, and, although not the prettiest coin, perform the basic function of having gold cons available when you need them.

Buy Gold Bars
One of the best ways to buy gold is to buy gold bars. These can be from the simple one ounce gold bars up to the 400 ounce gold ingots. In practice most people buy the smaller gold bars as 400 ounce ingots are somewhat impractical.

1 ounce gold bars, 1 kilo gold bars, Swiss gold bars, all are popular and all can be obtained for a premium. All gold bars are .999 fine gold and 24 karat. Each is stamped with the weight, purity and manufacturer. The larger bars also have a specific number unique to that bar stamped on them.

The larger the bar you can afford, the less the premium. Bars are more difficult to sell than coins however so are more suitable to people who have no intention of selling their gold.

Best Gold to Buy
In truth the best gold to buy is solid gold as distinct to "paper gold". This means buying actual gold bullion and not stocks or shares in gold. Stocks and shares are subject to other influences and stock market fluctuations. Some people say that gold does not provide any interest. This is a good thing since if gold were to pay interest then the return on gold would be dependent upon other factors instead of it being just pure gold.

Some people say that gold stocks are better than gold itself. This is another fallacy as gold stocks are subject to other market forces, such as, for example, when there has been a stock market crash, gold stocks have suffered the same fate, which gold has actually moved up.

Gold could be considered just another commodity, such as sugar or pork bellies. This is clearly incorrect as sugar and pork bellies are consumed and have to be replaced. All the gold that ever was is still around either in circulation or stored somewhere. It does not decrease and alone is accumulated and saved and used as a currency back up.

In fact gold stands by itself. The best gold to buy is solid gold bullion. Either by purchasing and storing the gold yourself or in bank vaults or through a trusted custodian.

Yes gold bullion in the form of gold coins and bars is definitely the best gold to buy.

3 comments:

Mark Herpel said...

Don't forget about digital gold currency, like GoldMoney.com

Mark
editor@dgcmagazine.com

cores said...

it`s true...?

Ysabella said...

I didn't know that gold was that important until I stumbled upon the BuyGoldAssets.com website. I was hesitant at firs but then realized the importance of it. Now, I'm trying to save up to buy some gold and save it for future use.