Gold Bullion Investments
Investing in gold can be a good way of preserving your wealth and preparing for bad times, people have been using this method for centuries.
Historically, gold is one of the most stable investment.
People have been investing in precious metals for thousands of years.
This is different than other investments such as stocks, which have been aound for a short time and whose volatility tends to be much greater than that of gold or other precious metals.
Ever since gold has been an accepted form of investment, it has been made available in many forms. One of gold’s most common forms is bullion and coin.
The purpose of this page is to explain the different types of gold as well as the differences between each type.
Though gold investing may seem like a pretty straightforward plan, the reality is that there are many forms, brands, sizes and variations of physical gold.
Below we have outlined some of the most popular types of gold and identified what differentiates them from one another.
Types of Gold Bullion
An investment in gold sounds easy enough, but something some investors fail to account for is the fact that there is more than just one type of gold that you can invest in.
There are three basic types of gold generally available to purchase, sell, and trade. These three types of gold are bullion bars, bullion coins, and bullion rounds. Each one is different from the other and therefore will carry different prices (even if the size, weight, and purity are similar).
Gold Bullion Coins
Coins are a form of gold bullion that also represent official currency in their home country at the time of their manufacture. The spot value of gold cause many of the gold coins in circulation today, to have face values that are much smaller than the coin’s actual worth or “melt value”. It would be foolish to use these gold coins to purchase consumer goods, at face value. Many investors buy them as a way of investing in gold. These coins can cost more to acquire than do other types of gold although not always.
Coins, unlike other forms of the metal, are produced by only the country in which they are viable forms of currency and are not copied anywhere else (legaliy). Because the supply of coins can be as limited or have been destroyed or lost over time, sometimes the value of these gold coins are heavily inflated due to the scarcity of the coin itself and its value to collectors. (Numismatic value)
This means that even though you may have two coins of identical size, weight, and purity coming from different countries, they will almost never be the same price. For this reason, some coins can serve as great investment vehicles, while others are more collector’s items as their prices will be inflated due to their relative scarcity.
This is sometimes referred to as cross collectables, having an intrinsic value related to the value of the metal used to make the coin, but also the collectable value which can also exceed the value of the intrinsic value of the same coin.
When the bullion value of these coins go up and exceed their numismatic value, the examples of lessor quality are sometimes sold and melted as just bullion. This can affect the value of the coin as each time another example is melted the rarity of that coin increases and drives the remaining examples higher.
Gold Bullion Rounds
The next type of gold is rounds. Gold rounds look and feel exactly like gold coins though they are different, because they are not government issued and therefore not currency and are instead produced by private mints.
Even though some rounds are made to look exactly like coins, they are rounds because they hold no legal tender status, these must be marked copy or replica or they violate the US laws about counterfeiting. Gold rounds are not as common as coins or bars, and, aren’t produced very often. Special mintages are produced in limited quantities to allow the manufacturing mint to offer a limited edition gold round and demand a higher premium in hopes that it will be well received by the collecting markets.
Gold Bullion Bars
The third type of gold that is produced, is gold bars. Bars are perhaps are one of the the most popular and come in a variety of different sizes.
Unlike coins they can be produced by private mints, and unlike rounds their designs are often simple and plain. The variety of sizes of gold bars is greater than any other type of gold. Bars tend to be the simplest to make and therefore have the least "Labor Load" in the cost equation each person must track.
The only exception to this last statement is that of casting grain with is the simplest form of gold to produce as it is simply poured while still hot metal into a water bath. This grain is primarily used by jewelry makers to make rings and the like for their customers. Note: this may prove the cheapest form of gold to purchase as it trades closest to the spot price. the downside is you have to assay it every time you sell it.
What Type of Gold should I purchase?
The real answer, we think is what form will bring the most return and how easy is it to convert into cash.
Always consider that you will one day want to sell your material, and you should be clear on what will be the most sought after Bar, Coin, Round or Grain / Shot, and how quickly can you convert it into cash.
Another consideration is from whom you purchase the metal from. If you are simply buying online you are dealing with someone a long distance away, and you don't get to look them in the eye. You lose that personal attachment you get when you're dealing with someone right in front of you. Additionally, you only have to show up at the shop or office to be able to reach out and take hold of the individual in front of you. The primary issue being a committed relationship with the dealer that is making a market of the material in which you are dealing.
The two most popular as far as gold is concerned are bars and coins. The wide range of sizes and even larger amount of producers means that you will have many more options to choose from.
Rounds, like bars, are produced by a number of different mints and can also be found close to spot value like bars.
The thing about rounds, however, is that they are sometimes harder to find depending on the issue and edition you are looking for. Because they are sometimes made in collector’s editions, certain rounds have higher prices inflated by high demand. Although this is not common, it does happen from time to time.
Now that you understand the different types of gold available, you can decide which types will be the best fit for you. Since there is no real answer to what the best type of gold to buy, a good place to start is to compare the prices of similarly sized gold products.