Basic Advice for the Best Returns on your Gold Investment

When looking to add to a portfolio consider investing in gold. There are four main reasons for investing in gold. It has a long-term store of value, is an asset of last resort, is highly liquid and is a good way to diversity your assets. Gold is a reliable store of value because it fulfills all of the functions of money. It is portable, divisible, indestructible, natural, easily recognizable and always accepted as a form of payment. No matter the financial climate, gold endures. While most currencies and commodities generally decline, gold withstands inflation and market fluctuations. It is a secure aspect of any investment portfolio.

Ruff's Little Book of Big Fortunes in Gold & Silver by Howard Ruff Detailed guide to a once-in-a-lifetime chance for middle-class Americans to get rich investing in one of history’s greatest bull markets. Ruff makes a usually arcane subject easy to understand, and even humorous. This bull market will dwarf even the 500% to 1700% profits his readers made in the metals in the 70s, and as usual, Ruff is out in front.

Throughout history, while paper money has come and gone, such as Confederate money, gold has remained stable. By investing in gold one doesn’t have to rely on the government or corporations for dividends. Most economic policies do not affect gold and whereas bank accounts can be frozen, gold is freely available. Gold is reliable for any planned long-term investments. It can be easily sold twenty-four hours a day, seven days a week in any number of markets around the world. When investing in gold to diversify, one can be either conservative or aggressive and still add value to the portfolio.

The price of gold is not affected by a companies profit unlike stocks and bonds. Its price depends on supply and demand, the rate of the US dollar, inflation and interest rates. But instead of being negative, the price of gold moves in the opposite direction of stocks and bonds. When the market bottoms out, gold generally increases in value, thereby stabilizing the investment portfolio.

Gold can be bought and sold anywhere in the world at anytime. Anytime is a good time to invest in gold. There are different forms that gold can take for investment purposes. The first is gold bullion. This generally comes in the shape of bars in a variety of weights and sizes. They can be as small as one troy ounce (1.09714 regular ounces) or as large as 400 troy ounces. The broker commission on gold bars is minimal and gold bars are often the most cost-efficient means. Bars marked with the “logo” of the refiner are the easiest to sell. The bars are generally 99.5% or higher pure gold, stamped .995 as well as stamped with the bars weight. Bars can be purchased from a number of places such as commercial banks, precious metal dealers and brokerage houses.

Another form of gold for the investor is gold bullion coins. These are often popular because they combine beauty with value. Whereas the coin bears a face value, that is merely symbolic. The true value is based on weight. Coins are minted in 1/20, 1/10, 1/4, 1/2 and one ounce increments. The price for coins is based on the bullion price plus 4-8%. Popular forms of coins are the American Eagle, the Canadian Maple and the South African Krugerrand among others.

Once the decision is made to invest in gold and the form has been chosen, next is the decision as to whether to have physical possession of the gold or to put it in storage. Gold can be delivered directly to the owner and secured personally or can be purchase through an intermediary and stored elsewhere for a small fee. By having a gold storage account, the investor receives a regular statement that tracks their purchases and sales as well as the value of their holdings. Usually, gold held in storage accounts is unallocated and mixed with the gold of other investors. This makes it less expensive to invest in gold. Allocated assigns specific gold bars or coins with markings to a particular investor.

For the more advanced or adventurous investor there are other, more advanced forms of investment, such as numismatic coins. The value of these coins is based on its rarity, the number originally minted, how old it is and what condition it is in. These coins are bought and sold by collectors with gold prices not having much affect on the price. These coins have a much higher value than their gold content. Also available are gold future contracts. With this form of investment the investor agrees to either make or take delivery of an agreed upon amount or quality during a specific month in the future at a specific, pre-arranged price. The price is determined by what the possible “forward carrying” cost for gold would be at that point in the future. Gold mining stock is part ownership of a corporation. To do this it is important for the investor to be familiar with the mining company and its financial status and potential future earnings.

Whatever forms the investor chooses gold is a solid, financial investment and a good way to diversify the portfolio. Gold helps to stabilize a portfolio, thereby balancing out riskier investments such as stocks and bonds.

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• When should You Buy Gold & Silver Bullion?
• Investing in Gold & Silver

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Investing in Gold & Silver

Humans have always had an eye for things that glitter, whether those objects be stones, metals, or organics. Ironically, the most hallowed of treasures have proven to have qualities that made them more useful for industry than for ornamentation. Nothing’s harder than diamonds, so they make great drill bits, blades, and grinding powders. Silver and gold have wonderful conductive properties; nothing conducts electricity better than silver, and both metals are both strong and ductile. Gold never tarnishes, even in salt water; silver does, but that is its strength. Its ability to chemically react with many other elements makes it ideal as the basis of most compounds used in modern photography. Silver and gold (not to mention their cousins platinum, palladium, and rhodium) have always been held dear, but once the industrial revolution hit and Wall Street roared to life, they became hot industrial commodities.

Portable Wealth: The Complete Guide to Precious Metals Investment by Adam Starchild None of us wants to watch our hard-earned money go up like paper in the wind. Open this book and discover how precious metals can add weight and substance to your investment portfolio in a time when very little is considered solid or certain. It could be worth its weight in gold.

Back in 1980, gold hit an all-time of $850 an ounce. Silver tagged along, rising somewhat. It really took off, however, when the Hunt brother of Dallas (Buckey, James, and Lamar), managed to corner the silver market and drive the price to over $50. At one point, the Hunts became $195 million richer every time the price went up by a dollar an ounce. By the same token, they lost $195 million for every dollar the price of silver dropped. Not surprisingly, they overdid it and eventually the price of silver tumbled to less than $11 an ounce, virtually overnight. The Hunts fell hard, losing a great deal of money, above and beyond the slap on the wrist the got from the government. After all, cornering the market was illegal. By the turn of the millenium, silver had stabilized at about $4.50 per ounce.

Warren Buffet and others have suggested that silver alone may rise to $20 per ounce by 2005, and where silver goes, gold usually follows -- and vice-versa. The Hunts aside, you needn’t be a millionaire to invest in either silver or gold. These days, coin dealers and the federal government have made it easy for you. And if you’ve a sharp eye, you can find a bit of good silver in everyday circumstances. What’s the secret? Read on.

Dribs and Drabs
Who says you have to buy silver and gold in bulk? Nobody, that’s who. You can buy pounds are a time, if you have the cash, but you can also invest at a rate appropriate to your income and interest. One easy way is by buying bullion and coins. The term “bullion” refers to any small, portable form of metal, which may take the form of bars, ingots, grains, or coins. Indeed, most gold and silver coins may be treated as bullion “in the round.” Gold was rarely used for coinage after the late 1800s, and silver was removed from US coins in 1964. Anything minted earlier, however, has a significant value simply as precious metal. Coin gold is very pure, but coin silver, as it’s called, tends to be 90% pure (as compared to sterling at 92.5%); the balance is copper. Typically, coin silver is worth about 75% of the current price per troy ounce (there are 12 troy ounces to the pound). Coin silver is easily obtained through auction services or at your local coin shop. Remember that some bullion and most coins have a collectible value as well as a pure precious metal value. If you’re collecting coins only for silver or gold, please be sure to pick only the most worn coins available. Anything in better condition should never be melted down. Remember, as a coin, its value is likely to increase as the years pass.

Since 1986, the United States government has been providing its citizens with an attractive and simple way to obtain silver and gold. They do this by minting bullion coins of extreme purity. The gold eagles (so named because of the eagle depicted on the reverse) come in several denominations: $5, $10, $25 and $50. In reality, they’re worth quite a bit more, and their value fluctuates with the market. Even the tiny tenth-ounce $5 pieces are usually worth more than $25, and they’re exceedingly easy to store in large quantities. The lovely $1 silver eagle, which weighs a troy ounce and consists of 99.93% pure silver, typically goes for $6-10 from a retailer. Their silver value averages about $5; the premium comes from their pure beauty as coins. Platinum eagles depicting the Statue of Liberty on the obverse have been available since 1997, but are for serious and wealthy investors only. These coins come in $10, $25, $50, and $100 denominations. An ordinary tenth-ounce platinum eagle is worth about $75; $100 eagles are worth 6-10 times their face value. Like gold eagles, they can easily be stored in large quantities in a small space -- or example, a safe deposit box or safe. Whatever form of government minted-bullion you choose, you can buy it from dealers by mail order or in person, or you can get it directly from the U.S. Mint.

Scrap and Garage Sales
Gold is scarce in everyday life, but this isn’t necessarily the case for silver. Bullion and coins are just two ways to collect it; you can also collect it by buying sterling silver utensils or objets d’art. Where can you find them? Try garage sales, flea markets, estate auctions, and online auction sites. Old sterling pieces have high collectible values, but modern sterling usually does not. Sterling silver can usually be identified by the word “sterling” stamped somewhere on the object, or by the number code “925” (meaning it’s 925/1000ths pure silver). If the object lacks these marks, it’s probably silverplate. While buying silverplated objects and restoring them can be quite enjoyable, these objects aren’t worth nearly as much as sterling. The silver in silverplate is extremely pure, but it’s merely a veneer over a base metal such as steel.

Occasionally, you might be able to acquire scraps or fragments of silver too small for normal use. Take them and add them to your silver horde; you can sell them enmass once you’ve accumulated enough metal to make selling worth the effort. And don’t ignore those broken or damaged items: flawed jewelry and cutlery are especially common. Many people recognize the value of a sterling object if it’s unmarred, but may lose sight of its value if it isn’t in perfect shape. Recently, I purchased a broken sterling fork at a garage sale. For days, I tried in vain to fix it; then it occurred to me that I was trying to mend 1.3 troy ounces of very pure silver worth more than $5 on the market. I got it for 25 cents, about one-twentieth of its actual value. The seller had failed to realize its value and, at first, so had I. Once I remembered that I had only one utensil of that type anyhow, and had proven to my satisfaction that I’d never be able to fix it properly, into my silver hoard it went.

I’ll be looking for more sterling this weekend, and probably will until garage sale season is over. Then I’ll move inside to the flea markets; they can be excellent sources of both silver and coins. Who knows: I may find that low-priced silver ladle, or a dinged teapot worth much more than I’ll pay for it. Whatever the case, I’ll enjoy the chase. See you there!

Related Post:

• When should You Buy Gold & Silver Bullion?

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When should You Buy Gold & Silver Bullion?

So you’re interested in buying gold or silver bullion. Well, buying bullion in the form of bars or ingots is one way to own gold or silver, but it’s not the most practical or enjoyable way. It may not be the most economical way, either.

Buying precious metals should not be regarded as an investment. An investment is when you loan a financial institution or company some money, expecting either a fixed rate of return, as from a Certificate of Deposit, for example, or in hope of large profits, as from buying a company’s stock and having the stock price increase substantially.

With commodities such as gold and silver, and other precious metals such as platinum and rhodium, you would convert cash to metal form to preserve your buying power. The prices of these commodities fluctuate daily based on a variety of predictable conditions, estimates of future commercial consumption of these metals, and unpredictable world events. Prices are published in the financial pages of most daily newspapers, and are also available on the internet.

So, it is possible to buy a quantity of your desired metal commodity and profit from an increase in its value, as determined in daily trading. It is also possible to lose value if the price goes down, similar to price movements of equities such as stocks and bonds.

The difference is that when you invest in a company by buying its stock, it has officers executing a business plan and a staff of managers, administrators and workers all doing their utmost to meet the demands and expectations of their customers, and provide their investors (you) with a substantial return on their investment.

When you deposit money at a financial institution, they loan or invest the money to make more money and pay you a part of the profit (interest).

With precious metals, you’re just exchanging your paper money for some other physical item perceived to have intrinsic (real) value by the world at large. Your gold or silver doesn’t do anything - it just sits there; and, depending on your financial circumstances, may tie up a significant amount of cash that you could either spend, or invest to make more money.

The best reason to own some precious metal is to protect your assets in case of unforeseen financial and/or economic turmoil. Potentially, maybe because of high inflation or an unanticipated catastrophic event, paper money or electronic transactions might be rejected by sellers, who may demand hard assets such as gold or silver in exchange for their goods and services.

Why? It is known that gold has been used both as a medium of exchange (money) and a means of preserving wealth in societies all over the world as far back as 6,000 years. The physical properties of gold, its scarcity, and its difficulty and expense to find, mine and refine, not to mention its beauty, make it a prized commodity in great demand the world over. These characteristics also apply, in varying degrees, to the other metals mentioned in this article.

Recent estimates put the total quantity of gold in the entire world at about 20 cubic yards, maybe the size of a small apartment building. Gold is one of the best, if not the best, conductors of electricity known. It cannot and will not oxidize or corrode. It can be easily alloyed with other metals to increase its durability while maintaining its desirable properties. It can be hammered into virtually transparent, paper-thin sheets. Some sushi bars in Japan even fold small, delicate sheets of gold into their fish rolls to be eaten by their well-heeled customers!

Hearing of the run-up in gold and silver prices back in 1979, and eager to be a part of the world of high finance, I once bought 3 one-hundred ounce bars of silver from a jewelry store. I held them for awhile and watched excitedly as the market price of silver, often called the “spot” price, rose steadily.

After a few weeks, I found a coin dealer who also bought quantities of precious metals. I sold him my silver bars and made a tidy profit. I was so proud of myself!

But a savvy co-worker educated me on a better way to own gold or silver. Coins, he said, not bars or ingots, are the way to go. I bought some coins and I was hooked.

The advantages of coins over bars and ingots are many. In addition to their utilitarian use as money, some coins are regarded as beautiful works of art which are sought after and bought, sold and traded world-wide.

Coins have a history, too. It’s fascinating to own a coin that may be a century or two old and wonder where it’s been and through whose hands it’s passed.

But the most important advantage of coins over bars or ingots is spendability. Let’s say, hypothetically, a few months after I bought my one-hundred ounce silver bars, inflation exploded and the price of silver went to $300 an ounce, and the price of a loaf of bread went from 59 cents to 30 dollars.

I couldn’t very well take my huge silver ingot, now worth $30,000, to the baker and expect him to make change. But I could easily take a couple of Type II Jefferson nickels, minted during World War II with 35% silver and now worth about $15 each (based on its silver content of about 1/20th of an ounce), to the baker and get my bread.

“Ahh”, you say, “that cannot and would not ever happen.” Well, it has happened, many times in many countries, even in the United States after the Civil War.

More recent examples are Hitler’s Third Reich, where inflation was so bad that, near the end, currency was printed only on one side to save time and ink, and factory workers were paid twice a day so they could rush the near-worthless cash to their wives at the factory gates so the ladies could run to stores and get food before prices went up and they didn’t have enough “money”.

A more recent example is Argentina in the late ‘70s and well into the ‘80s. Inflation was reported to run as high as 800 percent on an annualized basis. Banks offered interest on savings accounts at rates of over 100 percent, with virtually no one opening up new accounts. Israel in the 1980's also dealt with crushing inflation by issuing “new” shekels, printing new currency minus 3 zeroes, so that 1,000 old shekels became 1 new shekel.

World economic turmoil in the late 1970's and into the 1980's saw governments create what came to be known as “bullion” coins. Perhaps the most popular at the time was the South African Krugerrand, a one-ounce gold coin that could (and still can) be bought for the market price of gold plus a fee to cover production, shipping, etc. Hot on its heels came the Canadian Maple Leaf, the same type of coin. So if you wanted gold, but you didn’t want to support South Africa by buying a Krugerrand, you then had the choice of supporting our friends, the Canadians.

Several other countries issued similar gold coins, and later the coins came out in fractional denominations such as half-ounce, quarter-ounce and tenth-ounce. As with just about anything you buy, the smaller denominations may be more convenient, but will cost more on a per-ounce basis.

The United States eventually got around to issuing its own gold bullion coins, called American Eagles, and now there is a fairly wide selection of both gold and silver bullion coins from several countries. There are even some platinum bullion coins available.

Such coins are popular, so, during a fiscal/economic/monetary crisis, they would probably be accepted by sellers in place of paper money or electronic transactions. You can get them from reputable coin dealers in person or by mail. They may also be available through some jewelers.

Type II Jefferson nickels, mentioned earlier, are noteworthy. Also known as “wartime nickels” or “warnicks”, a roll of 40 of these coins, $2 in face value, contains over 2 ounces of silver. In uncirculated condition, the silver content of a roll is actually 2.25 ounces. In circulated condition, they are dark and ugly, therefore not desired for their appearance. They are easily distinguished from non-silver Jefferson nickels by their mint marks. The mint mark is a large “P”, “D”, or “S” above Monticello’s dome on the reverse of the coin.

These coins are plentiful. Around 850,000,000 were minted. They were produced from 1942 through 1945. They are easily obtainable through mail bid auctions held on a regular basis by various coin dealers. The beauty of these coins is that they are easily portable and their small denomination and small silver content make them ideal for small transactions in the event of a national or global monetary crisis. Further, since they are ugly, they are usually obtainable at, near, or even sometimes below the value of their silver content

There are plenty of other coins available as bullion. United States dimes, quarters and half-dollars dated 1964 or earlier are 90 percent silver. U. S. half-dollars dated 1965 through 1970 are 40 percent silver. Canadian dimes, quarters and half-dollars from 1920 through 1966 are 80 percent silver. In circulated condition, these coins are usually available at or slightly above the value of their silver content. They can be had from coin dealers but you may get a better deal buying locally from private individuals.

Bottom line: You want some gold or silver bullion? Buy it in the form of coins. When should you buy it? Before you need it. If you wait until you need it, you won’t be able to get it at a reasonable price.

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