Beginning Investors: Details On Purchasing Gold For Investment

The materials in this series are aimed at beginning investors, but more advanced investors can also benefit from this information. The purpose of these articles is to serve as a starting point for making informed choices in the diverse world of gold and to give an accurate idea of ​​what the various gold related tools look like and how they can be used.

Learn About Dealing In Gold

Investing in gold is purchasing physical gold coins or bars from a dealer, sometimes called a gold dealer. With the transaction, the buyer takes ownership and full possession of them. The purchase can be made either online or at a physical location.

Currently sells investment gold and silver only through online orders (with delivery to an address or our headquarters) or our physical branches . “Buy” and “Sell” prices are available on our website and are updated every 20 minutes to keep them current with global gold prices. We buy both investment gold and non-investment gold, including jewelry, lockets and various types of gold scrap. You can see more about this process in the ” Redemption ” category.

Although physical gold for investment can be bought on the Internet, it is not digital gold . With digital gold, the consumer does not receive gold bars or coins, at least until they claim them and pay a fee plus shipping costs. We’ll learn more about the different types of investments covered by the broad term “digital gold” in the next article in this series.

What Is Gold For Investment?

Not all gold is investment gold either. To qualify as such, it must be a gold bar or coin that meets certain legally defined criteria. A gold bar is investment gold if it has a purity of at least 0.995 (23.88 carats). The weight, purity, manufacturer and serial number must be indicated on the surface of the ingot.

A gold coin is investment gold when:

No value added tax (VAT) is charged on investment gold . Bullion and investment coins can also be of other metals. They are not exempt from paying VAT.

VAT & Other Things To Keep In Mind

This analysis focuses only on gold bars and coins that qualify as investment gold. Other gold products do not have the same characteristics. For example, their price premium can be very high and they are subject to VAT, which undermines their profitability as an investment asset. Historical numismatic coins also have a different pricing pattern. In separate articles we will look at the differences and details between gold bars and coins and whether jewelery is a suitable investment vehicle.

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Types Of Gold To Invest In

The main division when it comes to gold for investment is between gold bars and gold coins. But products can be classified according to several parameters, which shows how much flexibility this asset class offers.

One characteristic that can be used to make a choice is the pure gold content. Historical gold coins generally contain impurities of other metals because they used to be used in daily payments and required a high degree of strength, while pure gold is relatively soft. Modern ones are mostly pure gold with a purity of 0.9999 because they are not produced for the purpose of being used for transactions. An exception is the American Gold Eagle coin, which contains 91.67% pure gold, i.e. 22 carats.

Investment gold is available in a wide variety of weights. The smallest bars contain 1 gram of pure gold, while the largest contain 12.5 kilograms or 400 troy ounces. They are mainly used in bank payments, as central bank reserves and as a standard on some exchanges. Coins also have a wide range of pure gold content. For example, the Chinese Panda is available in 1, 3, 8, 15, and 30 gram weights, and the Vienna Philharmonic in 1/10 troy ounce or 1 troy ounce weights. In addition, coins can be divided into historical and contemporary.

There may also be a difference in the purity of the gold in individual products. Historical gold coins generally contain impurities of other metals, so a lower gold content. Modern ones are mostly pure gold with a purity of 0.9999 because they are not produced for the purpose of being used for transactions. The exception is American Gold Eagle coins, which contain 91.67% pure gold or 22 carats.

Last but not least, products can be distinguished by whether or not they have a certificate of authenticity. Gold bars are usually accompanied by one. The only form of certification that certifies the parameters of an asset is that issued by the refinery or mint that produced it.

How The Price Of Physical Investment Gold Is Formed?

Investment gold is the classic way to purchase the precious metal. This is no coincidence – buying and owning it can be very affordable, contrary to the popular belief that the precious metal is a tool only for the very rich. The smallest gold bar for investment weighs 1 gram and costs 316 RON at the time of writing. But how is this value determined?

Price Premium – Natural And Market

The price of gold bars or coins is determined by the pure gold they contain, the spot price of gold at the time of purchase, and the price premium charged. Expressed as a percentage, it represents the difference between the spot price and the final amount paid by the investor. This makes investment gold slightly more expensive than the spot price visible online, due to objective factors.

The price premium has 2 components. The first is the natural price premium, which is formed by the processes of physical processing of the gold up to the production and delivery of the finished product to the merchant. The natural price premium is a smaller portion of the final price for larger investment gold products and a larger portion for smaller sized ones. Simply put, the production cost for one 100 gram Valcambi gold bar is lower than for 100 1 gram Valcambibars . Therefore, the final price of the larger products is, other things being equal, closer to the spot price of gold than that of the smaller products.

The second component is the market premium. It reflects the demand and supply for a particular product in the market. What would happen if refineries and mints cut production globally, but demand for gold bullion was high? Their market premium would increase, respectively their final price would increase. If the difference between the ‘buy’ rate and the ‘sell’ rate remains unchanged, the price at which consumers can sell their investment gold to gold dealers will also be higher.

The impact on individual products is the same. If refiners have reduced production of smaller ingots, but their demand has not changed or increased, the price component will also increase, leading to higher final “buy” and “sell” prices.

Price Difference

The difference between the “buy” and “sell” rates, which reputable gold traders clearly indicate for each individual product, is called the price spread or price spread. Like the market premium, the margin is determined by the supply and demand for a particular product. But sometimes it takes into account factors such as the quantities of gold available in the markets or price volatility.

Both the spot price and the premium and margin are subject to change. Additionally, different products may have different premiums, even if they contain the same amount of pure gold. Let’s see why.

Some Examples Of Differences And Different Premiums

Price differences are caused precisely by differences in premium, margin, or both at the same time. It is relatively common for 1oz American Eagle coins to be more expensive than 1oz Australian Kangaroo coins . The reason? Sometimes the US Mint cannot produce enough quantities to meet the high demand. This leads to an increase in the coin’s market premium and, consequently, its final price.

Largely because of the natural premium, the 1-ounce Valcambi bullion has a slightly lower price premium than, for example, the 1-ounce gold coin of the Vienna Philharmonic . Under other conditions, it is cheaper to produce a bullion than a coin of equivalent gold content and purity.

Last but not least, limited edition products such as Australian Monthlys , for which there is no new supply, can have a much higher premium and spread than mass-produced ones. Their design changes annually based on the Chinese calendar year and are produced in precise numbers for each weight. Therefore, coins from previous issues may have a higher final price than coins with the same gold content.

The price premium is the only markup consumers pay when buying gold for investment – ​​there are no additional taxes or fees. The only other possible costs are related to storage and delivery to a specific address. The latter can be easily avoided, even for online orders, by picking up the products at a physical office. Protecting physical gold is an open question that only the buyer can answer.…

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Storage Of Physical Gold For Investment

Investment gold is a physical object (coin or bullion) and its storage is an important part of the investment. Although we refrain from making specific recommendations, our advice would be not to neglect this aspect of investments. Typically, the choice comes down to storing in a residence safe, an external safe or a safety deposit box.

Depending on personal preference, the amount of gold held and the level of risk tolerance of each individual investor, the investment in security can vary from nothing at a one-time but potentially higher fee.

In the case of investment gold, small physical items can be very valuable. A 100 g Valcambi gold ingot measures 27 x 47 x 4.50 mm. At the time of writing this article, its price is over 27209.82 RON or 5,500 EUR. Accordingly, their storage does not necessarily require large spaces.

Pros And Cons Of Physical Gold Investment

Investment gold investors enjoy many advantages. Among the most important is that they have exposure to the global spot price of gold for a relatively small and unique premium. This is the reason why its popularity is increasing.

Increased demand is seen globally, and certain markets, including the Balkan Peninsula, have been showing growth trends for years.

Advantages Of Gold For Investment

  • Gold for investment is one of the best tools for long-term conservation of purchasing power;
  • The purchase is easy, fast and affordable, and the same is true for the sale;
  • Gold bars and coins store a large amount of value in a small physical volume;
  • In Europe, gold as a physical investment is considered an asset as safe as money;
  • Many products in this category are legal tendertoday ;
  • Apart from possible shipping and storage costs, there are no additional fees or charges that consumers pay. Thus, the value of the investment does not decrease over time, as it happens in the case of many other instruments;
  • Trade in investment gold is exempt from value added tax;
  • There is no third party standing between the owner of physical investment gold and his asset – even in the event of force majeure or cataclysm, gold coins and bars are available and can be exchanged for currency or used as such. Thus, investors in investment gold are effectively independent of other institutions – an advantage they cannot obtain from any other asset;
  • Because gold bars and coins are available in a wide range of sizes, they offer flexibility, a wide range of options and accessibility both to buy and to eventually sell;
  • Gold is known and recognized throughout the world and traded at a clear and predictable price, thus offering holders unlimited options for the use of funds invested in gold, especially in times of need;
  • Gold for investment is a very liquid asset – that is, it can be quickly and easily exchanged for other currencies in case of need;
  • Allows the preservation of a very large value in a small physical volume;
  • Its purchase is anonymous and, up to certain amounts, does not require the mediation of a third party;
  • Physical gold is eternal;
  • Can be used as a gift;
  • PAMP gold coins and bars have an artistic design that adds aesthetic value.

Disadvantages Of Gold For Investment

  • Requires a secure storage location – this can be both an advantage and a disadvantage depending on the specific situation and user needs;
  • If the coins or bars are damaged, they may not be able to be bought at their investment gold price, but at their scrap gold price. It should be borne in mind that modern coins cannot be damaged, and bars should not be removed from their protective packaging, which often also serves as a certificate of authenticity;
  • It is advisable to buy products from a reputable trader with a history on the market, who works directly with the most well-known refineries and mints on the market, because there are also counterfeits;
  • Investment gold does not pay dividends, i.e. it is not an instrument that offers a passive yield.

Buying gold for investment brings many benefits to investors, most of which are unique to this asset. It is no coincidence that gold coins and bars have been used as money for millennia. They have remained so until now, being a legal means of payment.…

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The World Without The Gold Standard: Effects On Citizens And The Private Sector

Education, starting a family (children and a house), building a career, retirement – these are the moments of life that almost everyone lives for. But nowadays these goals seem more and more difficult to achieve, and life is more and more difficult. In large part, it got here because of the many opportunities for government intervention in finance and economics that arose as a result of the removal of the gold standard.

Destruction Of The Economy And Suicide Of Civilization

The lack of a gold standard allows central banks to manipulate the interest rate themselves. They are always about growth (even illusory) and allowing politicians to spend more. Therefore, they take the easy way out – lower interest rates, inflate bubbles, allow credit and expansion, and generate a temporary increase in the cost of deep crises.

Let’s take a step back. What is the interest rate? Interest is a norm that shows whether people prefer to consume today or save their resources for the future. High interest rates on loans do not mean savings and vice versa. When the interest rate is deliberately suppressed, we are told that it makes sense to consume savings today. At the same time, banks know that the purchasing power of money will evaporate due to inflation, and manipulation of the key interest rate also means low interest rates on deposits .

In this situation, the logical behavior is: let me shop today to get more goods and services now, because in the future I can buy less with the same amount.

Central bankers, at the helm of the sinking “fiat money” ship, are now creating a serious new problem. Real savings means capital for the private sector. When there is no real savings (and today the only thing growing is nominal deposits), businesses have less money to grow their business. Thus, the manipulation of interest rates, which is “possible” due to the lack of a gold standard, endangers production and entrepreneurship .

Individuals have fewer resources to cope with difficult times such as crises, unemployment or unexpected expenses. Today, this phenomenon is observed throughout the developed world. A Bankrate survey from early 2021 found that 61% of Americans could not afford a $1,000 emergency expense.

On the other side of the Atlantic, the situation is notrosier. The European Consumer Spending Report shows that 40% of Europeans do not save money. The ECB’s 2020 Household Spending and Consumption Survey showed that 100 million Europeans could not afford to lose their income for two months.

The Invasion Of Consumer Debt

As noted above, in an environment of artificially suppressed lending rates, consumers have a strong incentive to take out more loans. And that’s exactly what I do.

On average, global consumer debt stands at 21-26% of GDP over the last 2 decades of the absence of the gold standard. But, from 1971 to today, it has doubled.

However, big data hides the full picture. In Switzerland, Australia, Denmark, Norway, the Netherlands and Canada, household debt is over 100% of GDP by the end of 2019. The top twenty countries in the ranking (where consumer debt to GDP is over 65%) also include Sweden, Hong Kong, the United States, the United Kingdom, New Zealand and South Korea. Not far behind are the other major European economies and China.

What do they all have in common? The active conduct of monetary and interest policy by central banks (of course, there are many differences in the groups considered). At the same time, in Romania and Bulgaria the values ​​are much lower, respectively 14% and 23%.

The combination of huge debt and no savings is a ticking time bomb. This is the recipe behind most of the crises that have occurred in history .But instead of changing the policies that led to the crises, the banks have gone deeper and deeper into such actions over the past 13 years.…

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Gold Ira: Humiliation Instead Of A Well-Deserved Rest

Because many people can’t save at all, they can’t even set aside money for their old age. This is especially true for young professionals. In the United States, people under the age of 39 have less than $50,000 saved for retirement on average . For people under the age of 29, the situation is even more tragic – less than $10,000 on average.

The most frugal are individuals between the ages of 55 and 59, who set aside about $223,000. The bad news for them is that, given today’s retirement age, they need about $1 million to see them to a decent old age.

But the destruction of the gold standard hits retirees in another way. Since inflation has been devastating for the past 50 years, the money they put aside guarantees them little purchasing power anyway. Therefore, they have to save huge sums to ensure a decent old age – which, as it has already become clear, is practically impossible.

Without Gold The World Sinks Into Inequality And Poverty

However, undermining purchasing power, increasing the tax burden and destroying savings are not the only bad news for individuals.

When currencies are below the gold (or silver) standard, productivity growth is linked to wage growth. Therefore, the 19th century is the era in which the most drastic increase in the real standard is observed. Today we live incomparably better than 5 decades ago, let alone a century earlier. But if the world had kept the gold standard, this increase would have been even more drastic than it was then.

Thanks to relatively free markets compared to the mid-20th century and the opportunity to invest globally, entrepreneurs continue to innovate today. Accordingly, labor productivity increases. But after 1971 wages, although rising in real terms, began to lag far behind. By 2019, scissors were dissolving by more than 100% compared to 5 decades ago, although previously the two indicators went hand in hand.

Two Types Of Wealth: Honest And Private State-Backed

12 years ago, the world was torn apart by the Occupy Wall Street protests against the richest 1% of the population. According to the protesters at the time, their wealth should be taken through taxes and redistributed among all. That is how we would achieve justice.

Occupy Wall Street scored the wrong goal. It is true that over the past 5 decades, some people have accumulated wealth much faster than others. But this is not accidental. Some entrepreneurs create products and services that are used around the world. In their case, enrichment is not only a natural phenomenon, but also a desirable phenomenon. Just as the Olympics reward the best athletes, so the market rewards those who best satisfy the needs of others.

The Cantion And Chronism Effect

Others amass wealth not because of the free market, but because of their ties to the state. The link between private companies and public institutions or individuals is called cronyism.

The mechanics of croninismwere described as early as the 17th and 18th centuries by Richard Cantion and today are known as the Cantion Effect. Within it, increasing the money supply does not increase prices equally. On the contrary, the first beneficiaries of the newly created funds can buy goods and services in the market at their old (lower) prices. The reason is that the economy “doesn’t know yet” about the new money. However, their next recipients are already facing rising prices. Those after them – an even higher price, because more and more money wants to buy less and less goods. This is an application of the law of supply and demand .

The recipients of the newly printed money are usually people from the sectors most closely associated with the state, i.e. chroniclers. The crisis generated by the pandemic is one of the rare episodes where farmers, for example, received money directly. Regardless of who receives the newly printed money, currency inflation is a disastrous economic policy, as the people of Hungary, Venezuela, and Zimbabwe well know.

When their recipients are chroniclers, they take advantage of the fact that they can buy more assets at their old prices. In this way, those close to governments benefit from the multiplier effect, and inflation gives them a completely unfair advantage over everyone else.

This is the phenomenon that Occupy Wall Street should have been protesting against. It is not too late for this, considering that today money printing has unprecedented values, and those who do business with the state earn more than ever.

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