August 5, 2009A Primer on Purchasing Physical Gold
This primer is written with the aim of educating a first time retail investor on buying physicalgold coins/bars. The article is written with a U.S. investor in mind however its broad themesare valid for all global investors.
Which to own: Gold Bars/Coins/Jewelry?
For investment purposes, any of these wouldwork well. The main differentiator between the three is the premium paid for each ounce of gold. Gold bars have the lowest premium over spot gold prices, followed by coins. Jewelryusually has the highest premium, to account for the jewelry design and manufacturingprocesses.
Minimizing Fakery
: One of the biggest concerns that any gold buyer has is:“Am I gettingthe exact amount of gold that I paid for? How do I know that there is no other metal mixedinto my gold bar/coin?” One way to minimize fakery is to make sure that you only purchasegold coins/bars from an accredited dealer, certified by the Better Business Bureau. Anotherway is to purchase coins rather than bars, even though you end up paying a higherpremium. Coins are harder to fake and their authenticity is easy to verify. Most retailinvestors can easily purchase the Fisch Fake Coin Identification Gauge found athttp://www.fisch.co.za/. The device is easy to use, costs around $200 and works byverifying the density of gold. Since gold is one of the densest metals, if we can verify theweight of the coin and its dimensions (volume) then we know that it is pure gold and notsome other metal mixed in.
Where to buy coins/bars from?
Gold coins and bars can be purchased directly from themint or from its authorized dealers. Gold coins issued by the U.S. government can bepurchased directly from the U.S. mint website.
The U.S. mint lists all authorized dealers onits website. These dealers will also sell coins issued by other governments (e.g. CanadianMaples). As mentioned above, it is definitely a good idea to check a dealer’s Better Businessrating before making the purchase (e.g. USAGOLD Centennial Precious Metals is rated A+by the Better Business Bureau). Dealer purchases can be made by calling their tradingdesk and asking for a quote. Most dealers ship the purchased coins by insured mail.Shipping time can vary from 2 weeks to 2 months, depending on availability.
Which coins to buy
? From the perspective of an investor any coin will do, it is simply amatter of personal preference. Most mints sell gold coins in a variety of purities. The purestform of a gold coin is a 24K (24 carats) coin, with no other metal mixed in. Other types are22K, 18K and 14K (depending on the amount of copper and other alloys mixed in withgold). However, regardless of its carat weight, most mint issued coins usually have 1 oz of gold (make sure to double check with the dealer before buying). For example: If you buy a24K coin - you get a coin that weighs 1 oz and has 1oz of gold. If you buy a 22k coin - it1
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Nice article. Very informative. I believe there is no better time to be investing in gold First the phisical gold and then get some leverage with some mining shares There is going to be massive inflation coming. Are you protected for it? Michael Martin http://www.buyinggold-coins.com http://www.currentgold-price.com
Agree on increasing leverage with mining shares too.
Thanks! Appreciate your comment very much. Definitely have a pretty good % of physical gold in my portfolio. As you stated, that is the only way to left protect yourself from dollar depreciation and inflation, which is Bernankes agenda anyway.