| WAYS OF INVESTING IN
GOLD Investing in gold is exciting because of the unusually large number of ways you can purchase gold in today's market. You can invest in physical gold by buying gold bullion bars, coins or medallions - some of which sell for less than $25. Or you might want to use your credit card to buy a bank's gold certificate that represents your ownership of gold and is redeemable on sight. Or you can start a gold accumulation program for as little as 50. If you feel more at home with stocks, you might want to consider shares in companies that mine gold. There are also mutual funds, and more speculative gold futures contracts and options and many more. Your very own gold bar! Many investors prefer to take physical possession of their gold in order to have tangible control of their asset. Pride of ownership moves other investors to have their gold within reach so that they may display it to friends or admire it in the comfort of home. If you like the idea of taking physical possession of gold you may want to buy the metal in the form of gold bars or privately minted coin-like medallions. The standard unit of gold in international trading is still the 400 troy ounce (12.5 kilogram) bar with a fineness of 995, referred to as a "London Good Delivery Bar". One troy ounce is equal to 1.09714 regular ounces. The purest gold of 999.9 fineness is used in the making of smaller bars. Gold bullion bars are available in at least 19 sizes and weights ranging from a tiny one-gram bar and pocket- sized kilobar (32.15 troy ounces) to the large 400 troy ounce London Good Delivery Bar. This variety offers a wide spread in gold bar prices - running from under 20 to 100,000, providing opportunities for even the smallest investor. In addition to the advantages connected with having gold under your own control, there are several other reasons favoring investment in gold bullion bars. For example, commissions on the buying and selling of bullion bars are minimal. You will find it easy to sell gold bullion bars bearing the names of reputable refiners. And prices are quoted throughout the world. Gold bullion may be purchased from precious metals dealers, precious metals exchange companies, major banks and many brokerage firms. Gold Coins - The Universal Treasure Gold coins have fascinated the world's investors for over two thousand years. Many ancient gold coins are both rare antiquities and miniature works of art. They are bought and sold as individual items within the coin collecting (numismatic) community at prices well above the value of their gold content. There are also many modern gold legal tender coins that are frequently very beautiful and are issued in limited quantities to commemorate events or persons of national importance. Gold Bullion Coins are the "Gold Coins" of the investing public. Although many numismatic gold coins have been purchased by investors, most investors think of gold bullion coins when they think of investing in "gold coins". And bullion coins are favored by many investors who want physical possession of their gold. The popularity of these coins and privately minted coin-like medallions can be attributed to their small size, convenient weights, and easiness to store. The "typical" gold bullion coin is legal tender of a nation and its gold content is guaranteed by the issuing nation. It bears a face value that is largely symbolic because its market value depends totally on its gold content. If you invest in gold bullion coins, or in privately issued coin-like gold medallions, pieces, or "rounds", it will be easy for you to keep track of the daily value of your holdings because many of the most popular gold bullion coins and medallions contain one troy ounce of pure gold. And the price of one ounce of gold is reported daily in most newspapers. Other bullion coins have been minted in easy fractional weights such as 1/2-ounce, 1/4-ounce, and 1/10-ounce. Among the countries issuing bullion coins are South Africa, Canada, Mexico, China, Great Britain, and the United States. Bullion coins normally sell for a 3 to 15% premium over the bullion value of gold, but a large part of this premium may be recovered at resale. The premium of gold coins is justified by their ready divisibility,convenience, portability and marketability. Bullion coins and privately minted gold medallions can be purchased at selected banks, precious metals dealers and brokerage firms. You can also buy them at coin dealers and jewelers. Smaller bullion coins are becoming increasingly popular as investment jewelry. If You Don't Want Physical Possession of Your Gold... If, as an investor, you value convenience and speed over physical ownership of gold, you may prefer to invest in gold certificates, accumulation plans, futures contracts, options, gold mining shares, or gold funds. Gold Certificates Are Easy to Buy and Sell A gold certificate provides you with an attractive alternative to investing in physical metal. Issued by many banks, gold certificates obligate the issuer to deliver a stated quantity and fineness of gold to the buyer in accordance with the issuer's terms and conditions. With a gold certificate, the investor's exposure to gold is identical to bullion, but has the added advantage of providing convenient storage. Since many financial institutions issue certificates in fractional amounts, you have the opportunity to invest in convenient pound amounts. Certificates are also easy to buy and sell. Some major banks will even accept your credit card purchases by telephone. By buying a certificate, you receive certain other benefits. You don't pay any fabrication charges. There are no delivery charges. While your bullion is on deposit, insurance coverage will be maintained. You don't have to ship the bullion back when resale is desired. Your bullion position and the approximate current value will appear on your regular statements so that you will always know what you own. And since your certificate is an obligation of the issuing institution to deliver gold, you may exchange your certificate for the underlying gold at any time, or sell the certificate through the issuing institution. Gold Accumulation Plans -- Economical Way of Enjoying Ownership The gold accumulation programs offered by many precious metals brokerage firms allow the investor to enjoy all the benefits of investing in gold without the responsibilities and costs of handling and storage. With accumulation programs, you sometimes need as little as 100 to be able to start buying gold. And once you have opened your account with a reputable brokerage, you can add to your investment in amounts as small as 50 or as large as 5,000. Buying gold through accumulation programs can provide you with a number of advantages. You can make purchases at any time. Your order will be combined with other orders received that same day, and will be executed the next business day. Since your brokerage house or bank buys and sells in the wholesale bullion dealer market, you are assured of competitive prices. Because you are investing by the pound amount and not by the ounce, your purchases are made in whole or partial ounces. And you pay discounted commission rates that are up to 40% less than a regular broker charges on transactions. Your gold is stored in major depositories and is fully insured. Your record keeping is done for you, and you will receive a confirmation of each transaction and a periodic summary statement. While you leave your gold in an accumulation program, you do not have to pay state or local taxes. |
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