And by this I mean a way in which I can invest money in gold (or something with a similarly stable value) such that the price you pay is as near as possible to the metal's value, for example, with gold coins you're paying for the minting and the polishing, and even with the ingots that you see advertised there's got to be a hefty mark-up on the actual price the metal itself is worth. Well it,s going to cost you to buy it and I forget the premium and then its going to cost you to sell it, I looked into it a while back, and decided it wasn't worth it, unless your in it for a long time. also thankyou greatfate2000, if i could shower you with points as well i would :) Report It
in pounds http://www.ask.com/web?q=What%27s+the+be... buy it on paper trade the gld thats the ticker symbol,, it trades like a stock and you can sell it daily when the stock market is trading..you can buy a mutual fund also.... u will have to set up a brokerage account. with somebody else's money! Investment in gold can be done directly through ownership, or indirectly through certificates, accounts, shares, futures etc. However, gold's benefit as a secure asset may only be truly realised when directly owned and stored in bullion or coins. Most investors would not recommend storing gold oneself (e.g. in one's home or buried in the garden) but to use a bank or dealer. Other than storing gold in one's own safe deposit box at a bank, gold can also be placed in allocated (also known as non-fungible), or unallocated (fungible or pooled) storage with a bank or dealer. In the unfortunate case of the latter going bankrupt, the client will be unable to claim the gold and would become a general creditor, whereas gold held in allocated storage should be returned to the client in full. However even with gold held in allocated storage, many gold bugs would still choose their storage provider carefully, making sure of high net worth, with some preferring an offshore bank or storage facility.
Bullion
The most traditional way of investing in gold is by buying bullion gold bars. In some countries, like Switzerland and Liechtenstein, these can easily be bought or sold over the counter of the major banks. Bars are available in various sizes. In Europe these would typically be in 12.5kg or 1kg bars (1kg = 32.15072 Troy ounces), although many other weights exist, such as the Tael, the 10oz or 1oz bar. Some European banks, particularly in Austria, Liechtenstein, and Switzerland buy and sell gold bars and coins "over the counter". Alternatively, there are bullion dealers which provide the same service. The World Gold Council provide a directory of gold bullion coin and "small bar" (less than 1kg) dealers by country.
Coins
Buying gold coins is a popular way of holding gold. Typically bullion coins are priced only, or mainly according to their weight, with little or no premium above the gold price. Amongst the most popular bullion gold coins are the South African Krugerrand, the Canadian Gold Maple Leaf, and the Australian Gold Nugget. All these coins are popular because they contain exactly one troy ounce of gold. Other popular one ounce bullion coins include the American Gold Eagle, the Chinese Panda, and the Austrian Philharmonic. Gold coins which are used as bullion coins include the British gold sovereign and the Swiss Vreneli, but these are much lighter than one ounce, making it difficult for an inexperienced person to know their value. Again the large Swiss and Liechtenstein banks will buy and sell these coins over the counter. Also available is the gold dinar which has Islamic significance. Many bullion coin dealers can be found around the world by a simple Internet search.
Gold certificates
A certificate of ownership can be held by gold investors, instead of storing the actual gold bullion. Gold certificates allow investors to buy and sell the security without the hassles associated with the transfer of actual physical gold. The Perth Mint Certificate Program (PMCP) is the only government guaranteed gold certificate program in the world. Some argue that it is not the same as owning the real thing, as a certificate is just a piece of paper, especially in a war, crisis, or credit collapse.
Gold accounts
Most Swiss banks offer gold accounts where gold can be instantly bought or sold just like any foreign currency. Unlike physical gold, the customer does not own the actual metal, but rather has a claim against the bank for a certain quantity of metal. Digital gold currency accounts, such as e-gold or GoldMoney, work on a similar principle. Also available are BullionVault, who act as an internet bullion exchange and gold account provider. Gold accounts are backed through unallocated or allocated gold storage.
Gold exchange-traded funds
Gold exchange-traded funds (or GETFs) are traded on the major stock exchanges including London, New York and Sydney. The first gold ETF, namely Gold Bullion Securities (ticker symbol "GOL"), was launched in March 2003 on the Australian Stock Exchange by ETF Securities, and originally represented exactly one-tenth of an ounce of gold. Due to costs, the amount of gold in each certificate is now slightly less. They are fully backed by gold which is both deposited and insured. The gold can be withdrawn, subject to a minimum size of 100,000 shares. Gold Bullion Securities is two鈥恡hirds owned by the World Gold Council.
Gold ETFs represent a quick and easy way for an investor to gain exposure to the gold price, without the hassle of storing physical bars. Typically a small commission of 0.2% is charged for trading in gold ETFs and a small annual storage fee is charged. The annual expenses of the fund such as storage, insurance, and management fees are charged by selling a small amount of gold represented by each certificate, so the amount of gold in each certificate will gradually decline over time. In some countries, gold ETFs represent a way to avoid the sales tax or the VAT which would apply to physical gold coins and bars.
Gold shares
These do not represent gold at all, but rather are shares in gold mining companies. If the gold price rises, the profits of the gold mining company could be expected to rise and as a result the share price may rise. However, there are many factors to take into account and it is not always the case that a share price will rise when the gold price increases. Some of the following questions should be asked before investing in the shares of a gold mining company: Has the company already sold its future gold production, through forward sales? Is the company already producing gold, or is it mainly exploring for gold? Does the company make a profit? How many years of ore reserves are left in the mines before they have to be closed down? What PE ratio and dividend yield does the company have now and in the following years? Are the mines subject to political or economic risks? Does the company use hedging? Instead of personally selecting individual shares, some investors prefer spreading their risk by investing in precious metal mining mutual funds, such as Merrill Lynch's Gold & General Fund.
Unlike gold bullion, which is regarded as a safe haven asset, gold shares are regarded as high risk and extremely volatile. This volatility is due to the inherent leverage in the mining sector. For example, if you own a share in a gold mine where the costs of production are $300 per ounce and the price of gold is $600, the mine's profit margin will be $300. A 10% increase in the gold price to $660 per ounce will push that margin up to $360, which actually represents a 20% increase in the mine's profitability, and potentially a 20% increase in the share price. Conversely, a 10% fall in the gold price to $540 will decrease that margin to $240, which actually represents a 20% fall in the mine's profitability, and potentially a 20% decrease in the share price. The amplification of gold mining profits during periods of rising prices can cause a gold rush.
In order to reduce this volatility many gold mining companies hedge the gold price up to 18 months in advance. This provides the mining company and investor with less exposure to short term gold price fluctuations, but reduces potential returns when the gold price is rising. The AMEX Gold BUGS Index (ticker symbol "HUI") is comprised of the largest unhedged gold stocks listed on AMEX (BUGS - Basket of Unhedged Gold Stocks). As of 2004, the two largest stocks listed in the index were Newmont Mining Corporation and Gold Fields .
Unhedged gold stocks, AMEX Gold BUGS Index ("HUI"), have outperformed general gold mining stocks, represented by the Philadelphia Gold and Silver Index ("XAU"), over recent years .
Derivatives
Derivatives, such as gold futures and options, currently trade on various exchanges around the world. In the U.S., gold futures are primarily traded on COMEX (Commodity Exchange) which is a subsidiary of the New York Mercantile Exchange. Speculation about the future price of gold and other commodities takes place at COMEX. |
