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Gold Vehicles
With gold and other precious metals doing so well in the market investors wonder what investment vehicles are the best to capture the upward appreciation in the precious metals market. Many wish to buy and hold the precious metals themselves. There are certainly a number of different options and each one has its own strengths and weaknesses. This discussion gives some basic information on the most common possibilities. Depending on what your goals are, you may choose to use one or more of the available options described below. I'm not an investment counselor, nor am I offering any investment advice, but here is a brief explanation and introduction to each of the best known opportunities:
US and international gold bullion coins
The US and many other countries have made and are continuing to make gold bullion coins. These are not coins which are rare and have numismatic value, but are coins made for investors interested in their bullion value. The American gold eagle coin is available and denominations of 1/10 ounce, one quarter ounce, one half ounce and 1 ounce. The great advantage of bullion coins is that they are easily available, liquid and portable. Most coin shops buy and sell them. If you plan to buy small amounts of gold, perhaps half an ounce a month for investment purposes, this is the kind of thing you may be interested in. The disadvantage is that they have a significant cost of getting in and out. It will cost about $25 plus the spot price for 1 ounce coin, and if you sell it you will receive a few dollars less than the spot price. The cost for a buy and sell combined is about $30. Foreign bullion coins, such as Canadian Maples or Krugerrands are slightly less liquid but may also have lower buy and sell costs. There are also one ounce silver bullion coins, which are available with a similar significant cost to buy and sell
Until 1964, all US coinage other than nickels and cents were made of 90% silver. These coins also have a bullion value based on their silver content. You can normally purchase from just a few to a big bucket full, and they are sold both by weight and by face dollar amount - by weight is probably the better deal as some old coins are worn. These coins are available at most coin shops. Like other bullion coins, there is a significant cost to buy and sell.
US Gold numismatic collector coins
Many investors are interested in gold collector coins. These are coins with a large numismatic (coin collector) value premium in addition to their bullion value. These coins will fluctuate somewhat with precious metal prices, but many times they also contain a significant price premium due to their desirability as collector coins. Sometimes the collector price appreciates significantly, but for those who really wish to invest in the appreciation of precious metal prices, these coins are probably not the best vehicle.
The US and many other countries have made and are continuing to make gold bullion coins. These are not coins which are rare and have numismatic value, but are coins made for investors interested in their bullion value. The American gold eagle coin is available and denominations of 1/10 ounce, one quarter ounce, one half ounce and 1 ounce. The great advantage of bullion coins is that they are easily available, liquid and portable. Most coin shops buy and sell them. If you plan to buy small amounts of gold, perhaps half an ounce a month for investment purposes, this is the kind of thing you may be interested in. The disadvantage is that they have a significant cost of getting in and out. It will cost about $25 plus the spot price for 1 ounce coin, and if you sell it you will receive a few dollars less than the spot price. The cost for a buy and sell combined is about $30. Foreign bullion coins, such as Canadian Maples or Krugerrands are slightly less liquid but may also have lower buy and sell costs. There are also one ounce silver bullion coins, which are available with a similar significant cost to buy and sell
Until 1964, all US coinage other than nickels and cents were made of 90% silver. These coins also have a bullion value based on their silver content. You can normally purchase from just a few to a big bucket full, and they are sold both by weight and by face dollar amount - by weight is probably the better deal as some old coins are worn. These coins are available at most coin shops. Like other bullion coins, there is a significant cost to buy and sell.
US Gold numismatic collector coins
Many investors are interested in gold collector coins. These are coins with a large numismatic (coin collector) value premium in addition to their bullion value. These coins will fluctuate somewhat with precious metal prices, but many times they also contain a significant price premium due to their desirability as collector coins. Sometimes the collector price appreciates significantly, but for those who really wish to invest in the appreciation of precious metal prices, these coins are probably not the best vehicle.
Gold Jewelry
Some investors will want to consider the possibility of gold jewelry. Unfortunately, the cost of gold chains, gold beads, necklaces and other similar jewelry is such that a significant premium is paid to buy the gold and jewelry form. For that reason, while gold jewelry may be fun to wear, it usually does not make for a good investment.
Bullion Bars
Bullion bars of gold, silver and platinum are also purchased by investors. Bars are a popular vehicle and are available in a wide variety of sizes from small to quite large. Hundred ounce bars of gold are available. Bars usually sell and only a small premium to the spot price - with bars it is cheaper to buy and sell. While most coins are issued by governments or other well-known and trusted entities, there are bars issued by little known makers. These little known bars will not sell for a price as high as bars are more well-known maker like Englehard.
Bullion bars of gold, silver and platinum are also purchased by investors. Bars are a popular vehicle and are available in a wide variety of sizes from small to quite large. Hundred ounce bars of gold are available. Bars usually sell and only a small premium to the spot price - with bars it is cheaper to buy and sell. While most coins are issued by governments or other well-known and trusted entities, there are bars issued by little known makers. These little known bars will not sell for a price as high as bars are more well-known maker like Englehard.
Managed PM storage accounts
Another option is to invest money with operators who purchase and hold gold or other precious metals on account for the owners. The gold is kept in faults it is not available for delivery. Usually these accounts allow investors to buy and sell the precious metals very close to the spot price. As a result, it is an efficient way to invest, one well worth investigating.
Another option is to invest money with operators who purchase and hold gold or other precious metals on account for the owners. The gold is kept in faults it is not available for delivery. Usually these accounts allow investors to buy and sell the precious metals very close to the spot price. As a result, it is an efficient way to invest, one well worth investigating.
Natural Gold nuggets and other specimens
Still another possibility is to purchase in whole natural gold nugget or gold in Quartz specimens. Depending on the size, gold content and inherent beauty of these natural pieces prices may vary from only a little above spot to prices 20 times greater than the spot price of the gold contained. Quality pieces are difficult to find and purchase, and usually difficult to sell as well. While these can be very beautiful to own, for those who really wish to invest in the appreciation of precious metal prices, these specimens are probably not the best vehicle.
Still another possibility is to purchase in whole natural gold nugget or gold in Quartz specimens. Depending on the size, gold content and inherent beauty of these natural pieces prices may vary from only a little above spot to prices 20 times greater than the spot price of the gold contained. Quality pieces are difficult to find and purchase, and usually difficult to sell as well. While these can be very beautiful to own, for those who really wish to invest in the appreciation of precious metal prices, these specimens are probably not the best vehicle.
Exchange traded funds
A new and different option available only in the last few years is the exchange traded fund (ETF). In many ways these are similar to mutual funds and shares of ownership are bought and sold through the Stock exchange. However, while mutual funds hold assets consisting of stocks, exchange traded funds hold other items. These can include commodities like oil, corn or precious metals. At present there are a few gold based exchange traded funds and one silver-based exchange traded fund. There are rumors and suggestions that a platinum ETF is being developed.
The ETF share prices are tied directly to the price of the underlying metal. Usually these ETF funds allow investors to buy and sell the precious metals very close to the spot price, so it is an efficient way to invest, and generally a good option to consider for those wanting to invest significant amounts of money in the precious metals market. In addition, ETF shares can also be bought on margin or sold short. Your broker can help you in considering these possibilities.
