Gold Investing – Why and How

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Are you keen to examine the benefits of investing a portion of available funds in precious metals? In other words, Gold investing.

Well, allocating and converting a portion of your available cash funds to a gold investment is not an overly complicated process.

Presented in this brief article is a simple guide and ought not be considered as financial advice. First, here is a sample of some popular gold bullion items available now.

Use this handy search tool to find available Gold, Silver, Platinum, Palladium Bullion / Coins:




Gold: Investment or insurance?

Gold investing, and silver for that matter, is essentially a form of 'stored value' and is not subject to the ravages of inflation like paper money.

An investment in Gold, therefore, functions more like insurance for the other assets in your investment portfolio, rather than a growth investment.

Nevertheless, during those economic cycles of high inflation and economic volatility, the market price of gold can see impressive gains.

In what form is the best buy for gold investment?

The cheapest form, of course, is gold bars, krugerrands or sovereigns. Pure gold bars carry a lower percentage premium over the published gold price on the day of purchase.

For the smaller investor, krugerrands and gold sovereigns are a good choice because of their small size and aesthetic and historical qualities. Although this vehicle carries a slightly higher premium, it is worth the price for those reasons.

Gold Coins - Choices

American Gold Eagles are popular among investors. In fact,  Gold Eagles are reported as the best selling gold bullion coins in the world.

Canadian Maple Leafs, are also eagerly sought after by investors. However, in recent times their popularity is waning because they are prone to easy scratching and damage.

Mexican 50 Pesos and Austrian 100 Coronas are less popular and as a result can be acquired at a lower percentage premium then the Gold Eagles. So, keep an open mind to both of these gold bullion coins.

Gold Eagles carry greater investment appeal than 50 Pesos and 100 Coronas. Primarily because they contain one ounce of pure gold. By contrast, the 50 Pesos contains 37.5 grams (1.2057 ounce) and the 100 Corona .9802 ounce. Nevertheless, diversity in one's gold assets is a sound strategy.

Furthermore, Gold Eagles are stamped in English with the percentage of gold content. In contrast, 50 Pesos have 37.5 Gms ORO PURO stamped on them and 100 Coronas do not have their gold content on them.

Although less popular, gold investment coins include Australian Kangaroo/Nuggets are also noteworthy for adding to your gold holdings.

As a general rule, it is recommended to focus your attention on gold bullion coins that sell at small premiums over the value of their gold content, rather than collecting numismatic coins.

When to buy gold coins?

The answer is simple, anytime. why?

The answer is simple, dollar cost averaging theory.

For example, Gold is a traded commodity. The price of Gold on the market fluctuates on a daily basis and is influenced by many factors including: inflation; geo-politics and global economic conditions and broader economic cycles.

Analysts can speculate about the price direction of gold, but at base we can never know in what direction the price of gold may move neither in the short, medium or long term.

The key worth of gold is its 'stored value' feature and hedging and insurance power.

The point about dollar cost averaging is this: allocate your available funds to gold on a regular and sustained basis. This means, decide on a monthly dollar budget for acquiring gold and maintain that monthly routine.

As the price of gold rises, sure you will receive less gold for the dollar amount invested. As the price of gold falls, you receive more gold for the dollar amount allocated.

We would all like to predict when the price of gold will 'dip' or recede so we can buy at a lower price. But this is a pointless exercise. In this light, the best strategy is to adopt the 'dollar cost averaging' method.

Finally, one of the redeeming features of investing in gold bullion coins is the ability to convert coins back into cash in a incremental manner as your needs require.

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