When it comes to investing in physical gold, there are two main types of products to choose from: gold coins and gold bars. Each has its own set of advantages, but they also have some differences. Gold coins are often more expensive than gold bars, ounce for ounce. However, they offer several benefits that make them a popular choice for investors.
Gold bars, also known as bullion, are usually sold by the gram or ounce and must have their weight and purity stamped on the face of the bar. Gold bars are pieces of metal that are usually minted in the form of a cuboid. The weight and purity of the gold content is inscribed on the surface. This is desirable for those investors who want gold because of its inherent value rather than because it is minted in a certain way or takes a certain form.
Gold bars can be lent to banks by central banks, which then sell the gold or lend it to mining companies. Sovereign and private mints mint gold bars, while gold coins, which are considered legal tender, are minted with sovereign mints. Whether you buy your gold coins in person or online, you don't want to waste money on counterfeits or less pure gold than you are led to believe. Since its discovery thousands of years ago, the processes of refining and minting gold bars have improved and evolved on numerous occasions.
As such, there is no real difference between gold mined 3,000 years ago in ancient Egypt and gold mined last week from a South African mine. Whether you decide to buy gold coins or decide to buy gold bars, you'll appreciate the protection and peace of mind you'll get instantly once you take possession. Gold certificates can be exchanged for physical gold or the cash equivalent in a bullion bank. These are the “Good Delivery London good delivery” gold bars of approximately 400 troy ounces, refined and melted by several private refineries around the world, and accepted for “delivery” to London and other major gold bullion markets.
If you want to get the best return on investment from your gold products, you'll want to buy from a trader who charges the most competitive gold premiums for their products. The common perception is that rectangular pieces of gold (“bars”) are the most cost-effective, and perhaps the only available, form of gold bullion. The price of gold bars is influenced by the demand of companies that use gold to make jewelry and other products. Under a gold options contract, you have an agreement with the option to buy or sell gold if it reaches a certain price by a predetermined date.
This gives you exposure to gold as an investment without the risk or headache of handling physical gold.