There are many types of gold investment and we also discuss what gold bullion is.
GOLD BULLION:
The value of gold bullion is determined almost entirely by the market price of gold at the time of purchase. Gold bullion comes in one of the following two forms:
Bars: These are larger pieces of gold that are generally not kept in the physical possession of the investor, and are usually purchased by larger companies and organizations as opposed to individuals. There are several variations of smaller sized bars that are kept in by individuals in their possession.
Coins: Gold coins are minted in several different one ounce forms ranging from 1/10 oz. to 1 kilo; though one ounce coins are by far the most popular amongst small company and individual investors. Coins are kept either in possession of the investor or in depositories.
THE DIFFERENT TYPE OF GOLD INVESTMENT:
There is now a raft of different gold investment types. Physical gold coins and bars provide maximum security and peace of mind but can be expensive if traded regularly. Electronic gold such as ETFs and online fractional ownership provide exposure to the gold market at smaller premiums but present some counterparty and leverage risks. Ownership of gold mining shares presents a slightly different investment risk but offers the potential for greater upside (and downside) if the company outperforms the market. Gold funds such as the Blackrock Gold & General spread the risk of share ownership amongst many mining companies but have ongoing management fees.
PHYSICAL GOLD AS AN INVESTMENT:
It is a proven fact that human beings love to own gold in its physical state. There are certain advantages to this. Firstly, investments in gold bars and coins do not carry counterparty risks. When you buy any paper-based investment, such as stocks, mutual funds, bonds or derivatives, you open yourself up to counterparty risks. This is simply the risk of the underperformance of the company that issued the investment paper. When global stock markets are in turmoil, stocks of even blue-chip companies can crash. The value of your investment erodes considerably in no time and can even become worthless. This could mean investing in a purpose-built, robust safety vault. Such vaults can even be installed into the floorboards of your home, rendering them difficult to detect. Alternatively, you could opt for storage provided by a reputed dealer. In this case, please ensure that your gold is segregated and stored in an approved commercial vault, where it is free from damage, tampering or theft.
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