What kind of gold should I buy?

Answer. We probably get that question more than any other -- pretty much on a daily basis. The answer, however, is not as straightforward as you might think. What you buy depends upon your goals. We usually answer the "What should I buy?" question with a question of our own: "Why are you interested in buying gold?"

If your goal is simply to capitalize on price movement, then bullion coins will serve your purposes. If you are interested in long-term asset preservation and you have additional concerns about capital and/or monetary controls -- a more complicated scenario -- then you might want to include the lower premium variety of pre-1933 European and American coins in the mix. These have been treated by the government since the 1930s as historical, collector items and, as a result, afford the privacy-minded investor with a greater degree of safety than gold bullion.

But what I just gave you is a rough sketch. To develop a more refined strategy, we recommend spending time with your representative here at USAGOLD-Centennial Precious Metals. He or she can help you match the type of gold you buy with your goals. All of our client representatives are seasoned professionals with substantial experience. They can help you zero in quickly on your needs, and make sure you are not going in a direction contrary to your goals and needs.

When should I buy?

The short answer is 'When you need it.' You cannot approach gold the way you approach equity investments. Timing is not really an issue. The real question is whether or not you feel the need to diversify your present portfolio with gold. If you feel the need, the best time to start is now. With rising competition for the limited gold supply from both nation states -- like China, Russia and South Africa (to name a few) -- and individuals across the globe, there is the chance that small investors can be crowded out of the market at some point down the road. It is better to be a day early than an hour late.

You frequently mention gold as insurance. What do you mean by that?

Those of you who have read my book, The ABCs of Gold Investing: Protecting Your Wealth Through Private Gold Ownership, know that gold's baseline, essential quality is its role as the only primary asset that is not someone else's liability.

The first chapter of that book ends with this: "No matter what happens in this country, with the dollar, with the stock and bond markets, the gold owner will find a friend in the yellow metal -- something to rely upon when the chips are down. In gold, investors will find a vehicle to protect their wealth. Gold is bedrock."

This is precisely what people have discovered during countless crisis situations over the centuries and in financial meltdowns in recent history like the Pacific Rim in 1997, in Argentina and Brazil in 1998, in Turkey in 2002, and in the MidEast now. When crunch time came, those who owned gold understood what we mean when we say "gold is bedrock."

Over the years, we haven't altered this fundamental philosophy about gold ownership. In everything we do at USAGOLD-Centennial Precious Metals -- from our highly-regarded website to private conversations with our clientele -- we constantly emphasize this same fundamental precept of gold ownership. Needless to say, there are millions of people around the globe, including many Europeans and Americans, who agree with us on gold's utility in this respect.

What percentage of my assets should I invest in gold?

Once again the answer is not cut and dried, but a general rule of thumb is 10% to 30%; and how high you go within that range depends upon your analysis of the current economic, financial and political situation.

Obviously, the individual with a low level of concern about the current economic situation will tend toward the 10% level. Those with lagging confidence in the way things are going will gravitate to the higher end of the range. In recent months, we have had a number of investors go substantially over the 30% figure based on their own reading of the economy and the various investment alternatives available.

In the current investment environment, with yields still running below the inflation rate and stocks and bonds still suspect, gold remains a healthy and viable alternative. Many, including even the die-hard stock investors, still see gold as the most undervalued primary asset group in the standard portfolio mix. As a result, gold is getting a lot of attention. Gold is still in the beginning stages of what many financial experts see as a long term bull market.

Can you give us a profile of the typical gold investor?

Traditionally, wealthy, aristocratic European and Asian families have kept a strong percentage of their assets in gold as a protective factor. That same philosophy has caught hold in the United States over the years, particularly in the upper middle class, and there are a number of investors who add gold to their portfolio on an on-going basis as part of a regular gold savings program. This has been good for gold.

Most investors, as I alluded to before, acquire gold not so much because they feel that the price is going to go up, but because they want to insure their portfolios from destruction related to currency debasement -- no matter if their currency is the dollar, euro, yen or reminbi, for that matter.

Our clientele represent an approximate cross-section of America and Europe, but the heavy buying is concentrated in the professions and among people who own their own businesses. Those with family wealth have also moved to diversify into gold in recent years.

In your book, The ABCs of Gold Investing, you start the chapter by saying "Who you do business with is one of the most important aspects of gold investing." Why is that?

A solid, professional gold firm can go a long way in helping the investor shortcut the learning curve. A good gold firm can help you avoid some the problems and pitfalls encountered along the way -- provide some direction. It is very important to pick the right firm -- one that is highly professional, doesn't have a political ax to grind and can help you choose the right gold product mix to hedge your portfolio. Unbiased, objective advice from ones gold advisor is key to this process. So are market information and education. Pricing, product selection, fulfillment and on-going support also rely on that relationship. Picking a gold firm will be one of the most important decisions you make on the road to gold ownership. That's why we started this website and why it has become one of the most important gold sites on the internet.

Can you briefly describe what you believe to be the biggest mistake investors make when starting out as gold owners?

The biggest trap investors fall into is buying a gold investment that bears little or no relationship to his or her objectives. Take safe-haven investors for example. That group makes up 90% of our clientele, and probably a good 75% of the current physical gold market. Most often the safe-haven investor simply wants to add gold coins to his or her portfolio mix, but too often this same investor ends up instead with a leveraged (financed) gold position or a handful of exotic rare coins (often costing five or six figures). These have little to do with safe-haven investing, and most investors would be well served to avoid them -- except as a sideline.

What is your view of gold stocks?

Many of our clients own gold stocks and we believe they have a place in the portfolio. However, it should be emphasized that gold stocks are not a substitute for real gold ownership. Instead, stocks should be viewed as an addition to the portfolio after one has truly diversified with gold itself. Gold stocks could actually act opposite the intent of the investor, as some justifiably disgruntled mine company shareholders learned in the recent past. We cover some the differences between gold stock ownership and metal ownership in 'The Differences between Owning Stocks and Owning Metal' (see link below) so I won't go into the details here. Suffice it to say that gold stocks are stocks first and metal second. There is no such ambiguity involved in actual gold ownership.

What about gold futures contracts?

Futures contracts are generally considered one of the most speculative arenas in the investment marketplace. The investor's exposure to the market is leveraged and the moves both up and down are greatly exaggerated. Something like 9 out of 10 investors who enter the futures market come away losers. For someone looking to hedge their portfolios against economic and financial risk, this is a poor substitute for owning the metal itself.

What is the best approach for the safe-haven investor?

If you want to protect yourself against inflation, deflation, stock market weakness and potential currency problems -- in other words, if you want to hedge financial uncertainties, there is only one portfolio item that will serve you in all seasons and under most circumstances -- gold coins.

Why Buy Gold and When to Sell Gold

Why Buy Gold and When to Sell Gold
Why buy gold and when to sell gold is not as difficult as it seems.

On the-privateer.com it states, " In any discussion of the future of Gold, or of the price of Gold, the first thing that must be realized is that Gold is a political metal. In the true meaning of the word, its price is "governed".

"This is so for the very simple reason that Gold in its historical role as a currency is fundamentally incompatible with the modern worldwide financial system."

Throughout history, up to August the 15th 1971, in fact, there has always been a link between paper money and gold. The history of money is littered with the connections. Either gold itself was used as a currency, or if paper was used it was backed by or represented a value of gold.

Since that fateful day in August 1971 however, the successful action of having a medium of exchange was dropped and paper itself was called upon to represent value. But paper currencies hinge on the concept that the debt on which they are based will be repaid. The only way this is being done currently is with more paper money.

Richard Russell, editor and publisher of the Dow Theory letters commented in a recent post on his website:

"Quotes are great if you own stock in a public company in a big bull market. But the great majority of amateur investors make more money holding their homes over the years than they ever make in the stock market. And the reason is that if they own a home over the years, and that home is sensibly financed, they aren’t scared out their home by those damnable quotes during bear markets.

Holders of gold might mull over the same concept. Sure gold is quoted every hour of the day around the world. Long-term holders of gold might do well to ignore the quotes. If gold doubles in price, so what? -- are you going to swap your gold for paper? If gold drops by a third, so what? – are you going to dump your gold for paper?

Why not just relax and hold your gold? Hold your gold – why? The reason is that gold is the only true money, it's the only money that remains wealth no matter what happens in the world. Gold is wealth during the biggest boom and gold remains wealth during the worst depression. So why dwell on the daily dollar price, even though gold is quoted everywhere every hour of the day? Forget the bloody quotes, just accumulate gold. It's a good thing to have in today's unstable world."

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.

Gold Price

The gold price continues to be in the news a lot due to the steady rise of the value of gold as measured against the dollar.

But what does the gold price mean?
The value of gold actually does not change much. What does change is the amount of paper or electronic money needed to purchase an amount of gold, most universally measured as US Dollars (USD) per Ounce.

The gold price is also measured in 'price per kilogram' and 'price per gram'. For example the jewelry industry usually is concerned with the price of gold in grams whereas investors usually watch the price per ounce.

For over one hundred years from 1800 through to 1970, the cost of gold remained fairly stable with a very gradual rise from 19 US dollars an ounce to 38 US dollars an ounce.

Then in 1975 there is recorded a jump to 175 US dollars per ounce! This is a massive jump in just a few years. Not only that but in 1980 there was an even more massive jump to 641 US dollars an ounce.

In 1985, however, it plummeted by almost half and was steady in the 270 to 425 range until recently when it started it's march upward again.

However, whereas in the 1980s there was a dramatic rise, this time, so far, it appears more steady.

What does the rise in the gold price mean? Does this mean that there is less faith in the US dollar? Or is it just that people prefer to own something more solid than paper currency?

It was pointed out recently that if the US reverted back to a gold backed currency then, with the vast quantity of paper money (dollars) currently printed and in circulation, then it would take $52,000 USD to purchase one ounce of gold.

That gives new meaning to the word inflation!
It seems evident that the gold price demonstrates people's confidence in gold much more than in the dollar and, for gold owners, that can only be a good thing.

It is likely that in these economic and troubling times people will seek something that remains stable. And gold has a tradition of being stable come what may and, what ever the gold price, people will certainly be willing to pay it.

Which Gold Investment?

Which is the best way to invest in gold?
We believe there are a number of different ways to invest in gold:-

* Gold Accounts
* Gold Futures
* Gold Mining Shares
* Gold Bars
* Gold Coins

Gold Accounts
It is possible for larger investors to have gold accounts with major banks. In many countries such as the UK, this is not easy, as there is little tradition of banks offering gold account and dealing facilities. Accounts are usually only available with "private bankers" for individuals with a few million to invest. You may wish to read why we do not offer storage or accounts.

Gold Futures
This is a highly professional market, but is more for the speculator than the investor. It is essential to use a trustworthy commodity broker, as there are many potential abuses and pitfalls.

Gold Mining Shares
This is probably the best way to make a "paper" investment in gold. There is a simple theory that when gold bullion prices and demand increase, then gold mining share prices will follow. Some mines fully hedge their future production however, so the theory does not always hold true for all producers. Mining shares in general can be quite risky.

Physical Gold - Bars
Taking physical delivery of your gold is a very safe way of investing in gold. Gold bars are one method of achieving this.

Physical Gold - Coins
Gold coins are often more convenient than bars, and can often be bought for lower premiums than bars, weight for weight. There is a large selection available. The first decision is often whether to buy older coins or new "bullion" coins.

source:http://www.taxfreegold.co.uk

Lower Gold Price = Buying Opportunity

Our Opinion
We don't tend to hype the future gold price as do many other gold dealers, partly because it is often difficult to make any predictions. We explain this in our other gold price page which you should read first.

Update as at 7th March 2002
Gold prices and demand recently made a few strong upward surges, mainly sparked by the Japanese Government announcement that they were to reduce or withdraw guarantees to Japanese bank depositors. This caused strong demand in Japan, which we expect to continue.

A Lull
In the past few days, gold prices have been slightly lower. We believe this creates a good buying opportunity for those looking to invest in gold. Many investors wait for prices to start rising before they buy. We believe this is an error, and that it is better to buy when prices have recently softened.

In General
Although this page ws originally written at the time of a specific brief dip in gold prices, the advice we give is good general advice at all times. It is better to buy when prices are lower than when they are higher. It just seems so obvious, that we don't find ourselves saying it often enough.

Gold Bars or Gold Coins?
Which is the better way to invest in gold?
On this page we will assume that we are considering the options for a larger investor, although smaller investors will benefit by reading our advice also.

Gold Bars
For the serious and large scale investor, gold bars are a simple and efficient way to invest in gold. The larger bars are usually available at the lowest premiums over their intrinsic gold value, smaller bars tend to cost more. There is a trade-off however, in that larger bars are not as flexible when it comes to selling. If you own a kilo bar, and you wish to sell, say 100 grams, it's not easy to slice off one end of your bar. Your choice of buyer is also more restricted as you will need to sell to a larger dealer, it is unlikely that you will find a private buyer as most people are not familiar with gold bullion bars.

Gold Coins
It is sensible to consider modern one ounce gold bullion coins as being one ounce circular bullion bars, guaranteed by a government rather than a refiner.
Because coins are mass produced, and very efficiently so, they are available at very competitive prices compared with similar size bars.
Because gold coins are almost universally recognised, they are also easy to resell.

Changing Premiums
By "premium", we mean the percentage over and above the current gold value at which an item trades.
In the past (the 1960's), we have seen the premium on gold sovereigns as high as 40%. The exact prices and premiums depend on the market factors at the time, and can change from day to day or hour to hour. It is more likely for us to pay a premium for "older" gold coins such as sovereigns than "modern" coins such as Krugerrands.
For large purchases, typically 100 or more Krugerrands or 1,000 sovereigns, the premiums can be very close to those on gold bars. Small changes in percentages can make sovereigns, Krugerrands or bars more or less attractive. These changes are the result of changes in supply and demand.

Resale Considerations
It's very simple to look only at the percentage premiums when buying. In this case, most people would conclude that kilo bars were the "best buy", but this ignores the strong possibility that coins, particularly the older types, can be resold at premium prices, and can often be resold privately to collectors.
In the last quarter of 1999, we were paying about 10% premium for sovereigns, and about 4% premium for Krugerrands. Although our buying prices often represent a small discount to the current gold price, at times we do pay a premium for almost all types of coin. More dealers, jewellers or individuals worldwide would recognise and buy coins than bars.

Older Traditional Coins versus One Ounce Bullion Coins
It's also worth considering whether to opt for modern one ounce bullion coins such as Krugerrands, or older traditional bullion coins such as British sovereigns, Swiss francs, etc. For smaller quantities, these older coins will usually cost more than the one ounce coins, but for larger quantities, the premiums can often be comparable with Krugerrands or bars. Much depends on current market conditions, but any time that these older coins can be bought for similar premiums or only slighter higher, then they are worth considering.
Please see our Older Bullion Coins page for more information.

Our Recommendation
It's a slightly personal view, but we believe that if you can buy British gold sovereigns at around 1% or 2% above the premium on Krugerrands or gold bars, the we would prefer sovereigns. We also think that one ounce coins such as Krugerrands are a better buy than gold bars. Other one ounce coins are worth thinking about, but as Krugers are normally the lowest price, then Krugers automatically win.

source:http://www.taxfreegold.co.uk

What is investment gold?

For the purpose of the new VAT exemption, investment gold is defined as:

1. Gold of a purity not less than 995 thousandths that is in the form of a bar, or a wafer, of a weight accepted by the bullion markets;
2. A gold coin minted after 1800 that-is of a purity of not less than 900 thousandths, is, or has been, legal tender in its country of origin, and is of a description of coin that is normally sold at a price that does not exceed 180% of the open market value of the gold contained in the coin; or
3. A gold coin of a description specified in Notice 701/21A Investment gold coins.
   

Gold Investment Advice
We try to keep our investment advice very simple.
We cannot predict with any certainty what gold or any other commodity or currency will do over short, medium or long periods of time. Because of this we tend to avoid giving any definite advice or strong opinion. There are some areas where we have considerable experience, and feel we can safely give advice. Some of it may appear obvious, but it is surprising how often we find ourselves repeating it.

Buy in the Cheapest Form
This is one of the most obvious pieces of advice we give. But we usually add "within reason". Generally the cheapest ways to buy gold are bars, krugerrands or sovereigns. Of these three options, gold bars can usually be bought for the lowest percentage premium over gold, followed by krugerrands then gold sovereigns. Most other gold coins are more expensive, and therefore better avoided, at least by serious gold investors. You might think therefore that we would advise gold bars, krugerrands and gold sovereigns as the best gold investments, in that order. We believe however, that sovereigns are worth paying a slight extra premium for, because of their smaller size, and the historic and aesthetic values which you get for next to nothing. Our advice will change with changes in the market, but generally we believe the most effective ways of investing in physical gold are as follows:-

* Gold Sovereigns
Sovereigns are a smaller, more attractive, more historic, and probably better known coin than krugerrands, therefore we believe it is worth paying a slight extra premium over and above krugerrands, to buy sovereigns. If you can buy sovereigns for about 2% differential above krugerrands, we believe this makes them a better long term buy. Currently for investors buying at least 50 sovereigns, the differential above krugerrands is under 2%, sometimes as low as 1%, and this makes them our first choice. Naturally this is slightly subjective, and reflects our personal opinion. Consider though that if you were to buy sovereigns at our 100 piece rate, you could resell them singly at 10% profit, and be very competitively priced. You could not make the same claim for krugerrands.
Sovereigns also have the advantage of being exempt from C.G.T. (Capital Gains Tax) in the UK.

* Krugerrands
Krugerrands are the best known of all the modern one ounce gold bullion coin. They are available in greater quantities, and they can generally be bought at lower prices than any other one ounce bullion coins. This fact alone makes them the only 1 ounce bullion coin worth considering. True they are not particularly attractive, and don't possess much in the way of historical interest, but their production quality is consistently high, and they are a very cost effective way for small investors to buy gold. They are also easy to compare prices of, as they contain exactly one ounce of fine gold.

* Gold Bars
Although at a quick look, gold bars may seem the cheapest way to invest on physical gold, there are some points worth noting, and some drawbacks.
Our price for a single one ounce bar is usually exactly the same as for a single one ounce Krugerrand. Buy two Krugers though, and our quantity price breaks make krugerrands cheaper, and therefore a better buy. Also while it is true that larger bars, such as one kilo sell for a lower percentage premium than krugerrands, they are not as easy to resell. Only a specialist gold dealer is likely to give you a good purchase price for gold bars, and then often with less enthusiasm than for krugerrands, sovereigns, or other highly marketable coins. This restricts your choice of buyer, and most dealers would expect to pay slightly less for gold bars than for coins, expressed as a percentage of their intrinsic gold value.
If you buy large bars such as one kilo, it is not very convenient if you decide to sell a portion of it!
For very large investors, it may be worth considering London Good Delivery Bars, but the first thing to note about these is that, although they are usually quoted as being 400 ounce, or 12.5 kilo, bars, there is a large tolerance in their permissible weight range, from 350 to 430 ounces. There is also most tolerance allowed in their purity, the minimum being .995 or 99.5% pure. Most "small" bars are .9999 purity or 99.99%. Because of these factors, 400 ounce bars are usually only traded between governments, central banks, and major bullion banks, and other professionals.

Buy at Low Prices
It makes sense to buy gold when its price is low rather than high. Many people are tempted to buy gold when they hear that the price has risen. Although this can be the right action if the price continues to rise, it is often better to buy after the price has fallen. Conversely, if you believe that the time is right to buy, then don't wait and try to buy it at the absolute bottom, you are very unlikely to get it precisely right. We have heard it said many times that if you can buy within 10% of the bottom and sell within 10% of the top, you would be a very successful and happy investor indeed.

Compare Percentages not Prices
When trying to compare different forms of gold, compare the percentage over the gold price for each option. We call this the percentage premium, or just premium. Because the actual prices fluctuate constantly along with the underlying gold price, simply look at the price as a percentage of, or above the gold content.

source:http://www.taxfreegold.co.uk/investmentgold.html