Gold in physical form like gold-bars, gold-coins, nuggets or jewellery
The most noble and purest form of gold ownership is to invest in physical gold you can hold in your hand. Most common are gold-bars, so called standard-bars with a fineness of 999.9 (99.99% pure gold). There are different sizes of gold-bars: from tiny 1 gram which is about EUR 50, to 5 kilo bars worth EUR 200'000. Furthermore you get 2gr, 5gr, 10gr, 20gr, 1 ounce, 50gr, 100 gr, 250gr, 500gr, 1 kg and 5 kg gold bars.
Usually gold bars are being traded with a spread between buyer and seller price. This spread is the traders commission. Additional costs are not common. The spread is about 10% in the small gold bars of several grams. On a kilo-bar the spread is much smaller, about 1%. Small bars are more expensive then big bars. But in a currency-crisis, small bars might more conveniently be exchanged into goods. A 5-KG-Bar, having the value of a family-house, will cause troubles to get change for. Big bars however have the advantage of a easy, long-term wealth storage not even absorbing a lot of space. When buying gold bars, please go to a trusted metal-dealer or bank, and just buy gold minted by an accepted assayer or melter. A list of accepted assayers is published by the London Bullion Market Association.
Also very popular are gold coins. There are different modern coins and also a variety of ancient coins. While modern, new-age coins are being traded at the gold value solely, ancient coins have an additional collector's value. The Trading with gold coins is called "Bullion Coins". A disadvantage of coins is, that they have an even bigger spread then small gold-bars. But they are nice to look at and an ideal gift for grandchildren. Usually banks offer fair prices, but a comparison is always recommended. For bigger purchases a gold-trading-house might be a good choice. Also in the internet you find many gold dealers. But just go for reputable brokers, watch out for shipment and insurance costs. A reliable dealer will never sell gold at discount prices. Gold has it's value!
Standard Gold Coins, (Bullion Coins) traded at the pure gold value:
South Africa: Krugerrand 1 OZ, ½ OZ, ¼ OZ and 1/10 OZ
Canada: Maple Leaf 1 OZ, ½ OZ, ¼ OZ and 1/10 OZ
USA: American Eagle, 1 OZ, ½ OZ, ¼ OZ and 1/10 OZ
Australia: Nugget 1 OZ
UK: Britannia 1 OZ, 1 Pound old and new Sovereigns
Austria: Philharmonic 1 OZ, 100 Kronen, 1 Dukat and 4 Dukat
Switzerland: 10 Francs and 20 Francs Vreneli, 20 Francs Helvetia, 20 Francs Napoleon
Italy: 20 Lira
Mexico: 50 Pesos
Other physical gold investments
Furthermore you can buy gold nuggets, gold jewellery or gold watches. With these investments you have to carefully check the gold content (fineness) of these objects. Otherwise you pay too much. Cheap jewellery and watches are not much more worth than the gold they contain. If you want to have something more exclusive, keeping it's additional value, you have to invest more. Swiss luxury watches like Rolex, IWC or Breguet store there value for years or even increase in value over time. They should be able to maintain the premium to the gold value over time.
Storage of gold
The biggest disadvantage of gold is the storage. Buried in your garden you might not remember with 80. The house-safe will be robbed first! That might speak for a bank vault, where your gold is safely stored, unless the bank gets robbed too. A further threat to your gold is the state forbidding you to hold gold and taking it away from you. The state has the power to pass laws in this direction as happened in Germany 1936-1939 and in the US 1933-1974. If you want to store your phyical gold safely, you should not store all gold in the same bank, the same place or even in the same country.
Availability and trading of physical gold
An other disadvantage of gold is the limited availability. If you store your gold in a bank-vault or safe, you can not immediately place sell-orders if gold crashes. You first have to get your gold out of the hiding-place...
Some gold-bullion dealers offer online trading in physical bars (i.e. Bullion Vault). Please check if these brokers really offer physical gold, the gold is held in your name and in which country the cold is stored.
Also available for traders are metal-accounts. This is an account with a bank in the currency XAU, the symbol for gold. Amounts on this accounts are a gold claim against the bank which are at risk when the bank goes bankrupt.
Furthermore physical gold offers no USD currency hedge. Gold is traded in USD. If you bet, that the gold price in USD goes up, but you have no clue if the gold price in your currency goes up as well, you want to have a USD-hedge on your gold. Gold ETF's offer this to investors.
- life-time wealth-storage
- alternative currency
- pleasure to collect
- expensive spreads
- limited availability for trading
- gold ban
- no FX-currency-hedge