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Thursday, December 13, 2007

Buying gold bullion

With the financial markets undergoing sharp volatility almost daily, high deficits and US dollar on the decline, many people are looking to alternative investments for diversification. One alternative investment that some investors consider is gold - an investment considered from ancient times as an hedge against inflation, declining currency value, and political and other crisis. Not surprisingly, with the environment we are in right now, gold has traded at times at high values of $800/oz and above.

If investing in gold, there are number of ways to do it.

One of the commonly used ways is to buy stocks of gold mining companies or by investing in exchange-traded funds or mutual funds that buy such stocks, or trade in gold and other commodities.

Another alternative is to buy, sell or trade gold bullion directly which is the focus of this post. After purchase, buyers can either keep gold in their custody, or for security reasons, they can have it stored at several independent, professional vaults and depositories around the world.

There are several ways to buy gold. There are firms such as BullionVault that allow individuals to buy gold over the internet.

You can buy gold bullion in several forms based on the size, weight and purity of the gold. You can buy gold bullion in small amounts such as 1 gram, or in large amounts such as 400 troy ounces (32.1507 troy ounces is equal to 1 kilogram).

The standard industry unit is the 10-ounce gold bullion bar, with at least 99.5% fine purity.

Another option is to buy a kilogram gold bullion bar, also referred to as the kilobar. This form consists of 32.15 troy ounce gold, with at least 99.5% fine purity.

The third option is the 10-ounce gold bullion ingot, with the high purity of 99.99%. This is considered amongst the purest gold bullion bars.

The fourth option is to buy what are known as the Good Delivery bars. These are large bars,usually 400 troy ounces (12.4 kg) each and having atleast 99.5% purity. This is also the size of the internationally traded London Good Delivery bar.

There are other forms also that may be available when buying gold. Regardless of which form you are buying or trading, it is important to ensure that the seller guarantees the integrity of the gold, and certifies both the weight and purity of gold from an independent authority to ensure it is genuine and is what the vendor claims it is.

Just as you can buy the entire gold bar or only a small portion of it, when trading, you can trade gold in small increments (such as 1 grams). There are firms such as BullionVault that allow individuals to bypass gold dealers. Such firms provide a mechanism for individual buyers and sellers of privately owned gold bullion to quote prices and deal directly with each other, and claim to make the process safe and cost-effective. In exchange, these firms usually charge fees such as a custody charge, plus trading commission which may vary depending on the amount of gold that is traded.

Note: The above is a sponsored post.

Disclaimer: This post is for information purposes only, and not meant as a recommendation for buying, selling or trading gold, commodities, stocks or any other securities. Buying, selling or trading of gold, commodities, stocks and other securities can be risky and can cause significant losses; your should consult your financial adviser prior to engaging in such activities.

posted by Ruby @ 7:37 AM

3 Comments:

At 5:13 PM, Anonymous said…

Well, could you explain a bit about how you can sell gold that you already have? Almost every article on net only concentrates on buying gold but not on selling. Also, is there any difference between sell price and buy price for gold?
At 6:33 AM, Ruby said…

Yes, there's a difference between buy and sell price of gold. The difference represents firms' profits.

As for how you can sell gold you already have, am not an expert of buying/selling good but if I have to sell gold, I will start out by contacting a few local gold jewelers as well as checking internet for firms that let you buy/sell gold. Even if the local jewelers and other firms found on the internet may not buy gold themselves, they can help point me in the right direction. This should give enough info to get me started and then I can decide about the next steps and where to sell, taking commission and other fees, and other factors into consideration.
At 3:17 PM, Anonymous said…

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