Physical gold should form a part of every properly diversified portfolio.
Gold remains a universal finite currency, held by every central bank of note in the world. And central banks have become net buyers of gold in recent years and look set to remain net buyers for the foreseeable future due to their massive foreign exchange reserves and concerns about the dollar, euro, pound and all fiat currencies. As JP Morgan famously said, “Gold is money. Everything else is credit.”
In the same way that the family home should not be regarded as an investment, gold bullion is not an investment per se, rather it is money and it is a form of ‘saving for a rainy day’ or of financial insurance. It is to be taken possession of or stored with a secure third party and should not be traded. One does not trade an insurance policy and thus as a form of savings and financial insurance, physical gold should not be traded.
Gold is money and is the ultimate safe haven asset and a great way, if not the best way, of ensuring wealth preservation and for passing wealth from one generation to the next.
Modern Bullion Coins
Modern bullion coins allow investors and store of value buyers to own physical gold bullion. Bullion is precious metal in its purest form and gold bullion coins are investment grade (between 0.90 and 0.9999 fineness) legal tender coins.
The value of bullion coins and bars is determined almost solely by the price of gold and thus closely matches the spot price of gold as quoted on international markets.
Gold Bullion Bars
Gold bullion bars allow investors and store of value buyers to own physical bullion. Bullion is investment grade gold and gold bars are normally of 0.9999 fineness or 24 karat pure and trade at a small premium to the quoted spot price of gold.
There is little difference between owning gold bullion coins and smaller gold bullion bars and it is often a matter of individual preference. It is important to ensure that you own gold coins or gold bars from a well-known and trusted mint or refinery
Semi-Numismatic and Numismatic Gold Coins
Numismatic or older and rare coins are bought not solely for their precious metal content but also for their rarity and their historical, aesthetic appeal. Sometimes, they are leveraged to the gold price which means that the price of these coins may surpass and increase faster than the gold price in a bull market – due to their historical and aesthetic value and to their rarity.
Conversely, they may decrease by more when gold is in a bear market or is falling in value. Numismatics and semi numismatics can be bought from numismatic dealers and some bullion dealers with the requisite expertise. One should always work with established and trusted counter parties. Compare prices and make sure you are getting value for money.
Article courtesy of A comprehensive guide to Investing in Gold by GoldCore
