Before you buy gold coins or gold bars, read this.
There are many reasons to want to buy gold, but how you do it is critical to the total costs of owning physical bullion.
To determine the total costs of ownership you must consider not only what it costs to buy the small bar or coin, but also what you will receive for it when you come to sell. You should also include in your calculation the shipping cost and the cost of insuring it at home.
Many coin and small bar dealers offer ‘free’ shipping. When something is ‘free’ the cost has usually been shifted elsewhere. With gold it is often hidden in the price you pay for the coin or bar, along with the costs of the bar’s manufacture and the dealer’s mark-up over the wholesale gold spot price.
That wholesale price – also known as the spot gold price – is the price for buying or selling gold in the form of large, wholesale bars. Any small bar or coin will have started as part of one of these large 400oz (12.5kg) bars – the size and format that the professional market deals in.
Gold has been used to store wealth for more than 3,000 years. Why? Because gold is very rare – and gold today is becoming ever-more difficult to find and mine. Gold is six times rarer than platinum, and 18 times rarer than silver. Gold is also very nearly impossible to destroy. Unaffected by oxygen or hydrogen sulfide, gold cannot rust, tarnish or decay. Nor will gold melt below 1063 degrees Celsius. Gold is only dissolved by cyanide.
After 30 centuries of gold mining, new gold deposits are becoming ever harder to find. South Africa, the world’s largest gold producing nation, has seen its gold output more than halve in the last decade.
Since 2008, the cash cost of mining one ounce of gold has doubled for North American gold miners. The rate of inflation for gold miners’ all-in costs worldwide reached 27% last year. The total amount of gold above-ground, however, is growing by just 1.6% per year.
How to Buy Gold Safely?
The guide to gold includes articles that explain why gold is the original tool for trade, why every single gold based currency has failed, how much gold has ever been mined and why it’s rarity leads it to be a useful store of wealth/value. The guides also explains the key differences between unallocated and allocated gold and the importance of not only being able buy gold swiftly but also to be able to sell gold without delays or price penalties.
You will also be able to learn about alternative methods to gain exposure to gold and fluctuations in the price such as through gold bars and coins, certificates, ETFs, futures and mining stocks and shares. You will quickly learn and understand the pitfalls of some of these methods to owning gold.