We like investing in physical Gold and we also get the odd email asking us how and where to buy. Most people who buy the yellow metal buy Coins.
If you’re new to buying Gold then it’s important you understand what they call ‘the premium’.
What Is ‘The Premium’ In Relation To Physical Gold
There are costs involved when manufacturing and selling gold coins (and bars) which is reflected in what's known as the premium over the spot gold price. Spot by the way is another name for the current price of a commodity traded in the world’s major financial centres.
Simply put, the smaller the quantity the larger the premium. South African Krugerrands are usually priced at about 5% over spot with the larger gold bars at around 2-3%. The premium will differ from merchant to merchant so it’s always important to check prices before you buy.
Different Coins Can Mean Different Prices
1 ounce gold coins generally all contain exactly the same amount of gold but they are not all priced the same. Krugerrands are mass produced and so usually have the cheapest premium. But a special 1 ounce gold coin minted by the Bank of England or the US Federal Reserve might cost 20% more than a Krugerrand. This is because some coins are limited editions or perhaps have a special design.
But most people who want to own gold care little about design or how it looks, rather they want the gold content. For this reason it’s no wonder that Krugerrands are the most popular coins to buy.
Also bear in mind that a Krugerrand minted in 1971 would be priced exactly the same as one minted last month. It’s all to do with the Gold content and so newer coins are no more expensive. But if you delve into antique coins then it’s a whole different matter.
Where To Buy Gold Coins
Price is really the only important point. We like to use www.atsbullion.com in London and you can either buy in person, or via the mail (they offer a fully insured service).
We only buy 1 or 2 at a time but if we were going to invest say £5,000+ then spending 30 minutes phoning round the larger UK dealers to get quotes (P&P included) would be well worth the effort.
Summary
Some love Gold, others hate it but whether the price is going up or down it certainly makes sense to put some of your assets into the metal. Experts often suggest somewhere in the region of 5%-10%.
And if you buy gold with cash it's one way to make money disappear from the financial system.
