What's the Best Type of Physical Gold to Buy?
Gold has been a popular investment and a store of wealth for thousands of years. There are two basic forms that gold bullion can be bought in: bars and coins.
Whether you want to invest in gold or just have a portion of your portfolio that is protected against inflation, there are many reasons to justify adding gold to your holdings.
So, what is the best type of physical gold to buy? There are several key factors to consider when purchasing gold. We have listed below the important points about what kinds of gold products to buy and what to look out for when purchasing them.
How is current Gold Price Forecasted?
The gold price, commonly referred to as Spot Price, is a term used to describe the price of gold, and is quoted in US dollars per troy ounce. The gold price daily updates on your screen are based on the London Bullion Market Association (LBMA), and COMEX in New York daily prices fix for fine gold, which are listed here. These prices are based on over-the-counter transactions among key international banks and bullion dealers worldwide.
The gold price is one of the most vital indicators in the financial markets, and is tracked constantly by thousands of investors across the globe. As a result, its value changes constantly. At Bullionjoy, you can access up-to-the-minute gold prices, as well as data on silver, platinum and a range of other metals. Our bullion products are priced in line with global spot price.
The global spot price for gold is based on sale and purchase of large number of London Good Delivery Bars which are 12.5 Kilograms each. The spot price shown on our screens is only available to large banks and other financial institutions fixing gold in very large quantities. Spot price however forms the basis of the retail price that is charged for bullion for retail sale.
Due the above reasons, the smaller bullion bars are sold at a premium above the spot price to account for additional costs of producing, storing and transporting them.
Main factor for gold spot price
Bullion dealers and traders use the ‘spot price’ of gold as a reference against which they buy, sell and store gold.
The Gold price gives you a good representation of the international gold price or spot price. The price is updated frequently during the day and is reflective of the average price of 1 troy ounce of gold bullion being bought and sold for on a global level in a bar form. International Gold prices are affected by economic indicators and price movements are closely linked to the confidence or deflation in the business sentiment, political insecurity, as well as changes in consumer spending. Metal prices fluctuate with overall market sentiment with rallies typically taking place during times of political and financial uncertainties.
The live spot price of gold on our website updates every 2 minutes, depending on how the precious metal is performing in the market. A benchmark gold price rate is also released twice daily, in the morning and in the afternoon, by the London Bullion Market Association (LBMA), this is known as the London Gold Fix, also referred to as AM Fix and PM Fix.
Which Gold Bullion products are there to invest in?
The word “bullion” comes from the old French word for “bar” or “block,” considering this literal meaning, the classic physical form that gold takes when mined, melted traded around the world is of small and large bars of gold.
In general terms Gold bullion is referred to gold that’s bought and sold for investment purposes. It includes gold bars, ingots and coins, but tends to exclude jewellery, which isn’t considered investment gold in the same way. When you purchase a gold bullion product, you aren’t buying a piece of jewellery, but rather a physical bar or coin made of 99.99% pure gold.
What is the difference between gold bullion and coins? You may have heard people talking about owning ‘gold bullion’, or you might have heard them owning ‘gold coins’. Both are very similar in their weight and purity, but the only difference is generally in the shape and design. Gold bullion is more often referred to a bar or ingot with only refiner stamp, weight and fineness information. Gold coins on the other hand are also gold bullion however they are in a shape of a coin, carry a legal tender status, have varying designs on both the reverse and obverse, and they are mainly issued by Sovereign Mints like the UK Royal Mint, Royal Canadian Mint and The Perth Mint. Gold bullion coins issued by private mints are not coins as they do not have legal tender, they are gold rounds.
Which physical gold bullion should I invest in - gold bars or gold coins ?
When it comes to investing in gold, there are generally several key considerations: Firstly, the amount of gold you wish to buy for example fractional gold increments, 1 full ounce or larger denominations. Secondly, your method of purchase for example are your taking physical delivery of your metal or storing in accredited storage and Finally, your intended purpose for example gift, long term, short term investment, purchasing a particular coin series or diversifying your portfolio. Based on these variation, you may wish to consider a variety of gold types to suit your own needs.
There are two broad categories of physical gold to invest in which are bars or coins. Both gold bars and gold coins have their pros and cons, but what’s important is that you choose one form or the other, or both if you want to diversify your portfolio as much as possible.
One of the most traded form of physical Gold bullion form is Gold bars. Gold bullion bar are physical blocks of gold, formed in their current shape either by minting (commonly known as minted gold bars) or casting (commonly known as gold cast bars). Each gold bar can weigh between 1 gram to 12.5 Kilograms, in troy ounces terms 0.032 ounces to 400 ounces of pure gold. All the manufacturers and mints around the world use similar weight measures for ease and uniformity of trade, for example, one troy ounce of gold bar will always weigh the same, no matter which mint created it, while the amount of gold it contains may vary due to the fineness. Higher the gold content in bullion bar, higher the price.
For Physical gold investment , bars offer a convenient and cost-effective way for investors to diversify their portfolios. With all of the potential gains on offer, it’s no surprise that gold bars remain in high demand.
Gold bullion is also bought in form of coins or rounds. In general, the precious metal your coin is made from is also denominated on the face of the coin. This includes collectible bullion coins and other types of coinage. The gold product you purchase should be marked with the purity and mass such as .9999 fine gold or 24k and the weight. Each coin carries its own denominational value, much like paper currency does. The actual value of the coin compared to its legal tender status value is much higher and these prices usually fluctuate based upon gold market price trends.
Gold bullion coins/ Sovereigns can be bought in 1/4 oz, 1/2 oz, 1 oz, 1/10oz, or 1/20oz sizes. The smaller sizes are intended for collectors and may carry a higher premium over precious metal value.
The other biggest difference between gold coins and gold bars are how they are priced. Gold bullion is priced based on the spot price of one troy ounce of gold plus the premium over spot.
Gold bars typically carry a smaller premium above spot price than coins and rounds due to lower production, transport and storage costs. Another general rule to remember when purchasing gold bars is, higher the weight of the bar you are purchasing, lower the premium you should pay over spot. Gold bars are used by investors looking to either store their wealth securely, or profit from trading gold prices on the market. Due to availability of large weight variations in gold bars they make it more straightforward to transact large trades so long as you’re buying and selling reputable brands with a trusted dealer.
Gold coins and rounds on the other hand tend to attract higher premiums over the spot price to reflect the additional costs involved in designing, production, storage and transport. One of the benefits of purchasing gold coins is that certain gold bullion coins enjoy the legal tender status which means they are Capital Gains Tax (CGT) Free based on country and residency criteria. Additionally Gold coins can also benefit from increase in value above their ‘metal value’ if they are from a popular coin series, bear a popular design, a low mintage coin, from a particular year and a coin from a sought after mint.
One of the other ways to invest in gold is to invest in Gold ETF’s (Electronic Traded Funds), Gold Stocks, Gold Futures, Mining stocks and Mutual funds that invest partially or wholly in mining companies. These options provide a potential for earning dividends when investing in gold however they do not provide the same security as owning physical gold yourself. In addition to the risk factor the electronic traded funds (ETF’s) can also attract higher brokerage commission on each trade and the success of each of these funds can depend on how well the individual companies have done where your money has been invested and often not linked to movement in bullion prices.
At Bullionjoy we only deal and sell physical gold and silver bullion products which you can hold or store at accredited storage and you have physical possession of your investment.
How do you purchase gold bullion online?
At Bullionjoy we are dedicated to offering you easy access to physical gold and silver bullion. We offer a comprehensive portfolio of gold coins, bars and gold rounds from the biggest names in the industry such as The Royal Mint, PAMP Suisse, US Mint, The Perth Mint, Royal Canadian Mint, Metalor and many more. You can buy online from us on our secure platform.
We offer a safe, trustworthy, and efficient service, and specialise in sourcing unique and rare items so that you can buy gold bullion online safely and with complete trust. All our parcels are delivered fully insured in discreet and unbranded packaging.
Why buy physical gold online from Bullionjoy?
While there are several ways to own gold, the most popular is to hold it as a physical product. Physical gold is in many ways fundamental to its appeal, and today one of the easiest and most accessible ways to invest in physical gold is to buy Gold Bullion Bars or Gold Coins online from Bullionjoy.
Now that you have an idea of the difference between gold bullion and commemorative coins, and how to buy your gold correctly, take a look at our online shop to view our full range. On our website, all of our gold bullion prices are automatically updated in line with the current gold spot price, allowing you to be sure that you are always paying the best possible price.
If you still need further help in choosing, need more information or want us to talk you through our ordering process then we are here to help, contact us in one of many ways here.