Why Buy Gold

The main reason to buy gold is that bar unimaginable catastrophes – gold will increase in value. Not only that but at this time of horrendously low interest rates on savings accounts with banks and building societies, gold is almost certainly better than money in the bank.

Yes, the price of gold has its ups and downs – on a daily basis! – but the overall trend during the past 10 years has been ever upward. To such an extent that gold prices per gram are almost 500% higher than they were 10 years ago. There was a period in the early 1980’s when there was an incredible, but short-lived, gold boom, but prices now are substantially higher than they were even then.

How to Buy Gold

I am only going to talk about actual physical gold here: gold bullion or bars, gold coins and gold jewellery. This is by far the easiest way for the small investor to stash some money away in gold.

My top 2 places to buy gold in the UK, may surprise you!

My number 1 choice of where to buy gold is eBay. You may have to hunt to find the bargains but it is still possible to find pieces of gold jewellery selling on eBay for less than their scrap gold value. It is also probably the cheapest place to buy gold coins such as Sovereigns, half Sovereigns and Krugerrands.

You may think you are taking a risk by buying on eBay but in reality there is very little risk involved. If you pay for an item via PayPal you will get your money back if you do not receive the goods or if they are not as described. To be extra secure use your credit card via PayPal then you have reduced the risk to zero.

For example at the moment (July 2011) a standard full gold sovereign from the 20th century (this does not include proof issues) will cost you £220-£240 whereas a brand new one from the Royal Mint costs £269 for a 2010 issue and £285 for 2011. The scrap value of the actual 22ct gold content of the sovereign coin (7.98g) is around £218. A gold coin bought on eBay is unlikely to be in mint condition but this makes little difference to the resale value of modern coins. It is only when you look at Victorian or older gold coins that condition is a vital element of value as they tend to be priced well above scrap.

Of course, there are a lot of people willing to buy scrap gold and gold jewellery on eBay right now but there are still ways for you to pick up pieces at bargain prices. It is pointless for the smaller buyer to look at job lots of scrap gold which are advertised as such – you will get outbid by the more experienced buyers. Instead look for single gold rings from inexperienced sellers that are badly described. Often rings that are worn, bent, have personal names, initials or engraving or are just plain ugly, sell for low prices – sometimes less than scrap value.

You can also frequently pick up bargains if you bid on rings containing stones – the gold buyers usually stay away from these and if you can find an unattractive engagement ring from the 1970s you are more than likely on to a winner. Just make sure you have a cheap but good hallmarks book and a Jewelers Loupe so that you can check the gold hallmarks when your purchases arrive.

My second choice of where to buy gold in the UK is even more likely to shock you – Argos!

Argos buys gold jewellery in huge quantities and frequently have special offers where they sell unpopular pieces at way below the normal retail price. It is possible to buy items of discounted gold jewellery from Argos at only slightly above the scrap value of the gold.

When to Sell Gold

The answer to this question is only when you absolutely have to or when you have planned to. As I have said before, gold is better than money in the bank and the longer you can hold onto it they more valuable it is likely to become.

Having said that buying gold is a fantastic way to save for something. It is easy to buy and even easier to sell. Just imagine what a great investment a gold sovereign coin bought for a baby every year on their birthdays and at Christmas would be? They wouldn’t have to worry about a student loan when it came time for them to go to University or it could even fund a car purchase or a deposit on a flat.

Maybe you want to save for your retirement or to take that dream cruise in a few years time. Just buy a 9ct gold chain from Argos or eBay then every month buy a gold ring and hang it on the chain. In a short time you will have a valuable nest egg.

Invest in Gold with Gold Bullion, Gold Bars or Gold Coins

You may find it a more attractive prospect to invest in gold by buying gold bullion or bars or gold coins. Ordinary gold jewellery in the UK is commonly 9 carat gold, but gold coins and bars will usually be a much higher quality – 22 carat or pure gold 24 carat. These are therefore far more valuable per gram.

Again, you can pay a premium price for premium quality or you can go for the cheaper option from eBay.

Buying gold as an investment or a savings plan is as safe as (or even safer than) houses.

Gold prices have endured a certain amount of fluctuation throughout the year of 2010, in line with the continued economic downturn and subsequent recovery. However, on average the value of gold has risen steadily through the fiscal year, soaring from a unitary cost of £24.09 in April to £27.50 in early November. The value of gold emerged from a troubled 2009 and consolidated steady growth through the summer months, leaving a bountiful market and tremendous opportunities to sell gold to the renowned winter consumer demand. This year has proven the assertion that the average value of gold actually rises during times of depression or economic decline.

Indeed, for those with the acumen and capital to buy gold throughout 2009 and the early months of 2010, their investments could reap solid rewards. For hoarders and traders, there is an expectation for the price to peak through December, therefore providing the optimum time to cash in, both in terms of the gold’s market value and the level of demand present within the marketplace. The rise in the price of gold is also reflected in the average unit costs of 14, 18 and 22 carat scrap items, with an increase of £3.00 per range between April and November 2010.

Specialist Items And Investing In Gold

In terms of buying gold for an incremental investment, gold coins and bar format gold bullion are two of the most popular choices. These items are very collectable, and there are many individuals who will purchase gold privately for a negotiated fee (in line with the specifications and overall value of gold). Such investments have historically proved popular, as fluctuations in the price of gold are not as drastic or changeable as other investment commodities, and this trend has continued through 2010. Coins and bullion are an ideal source of financial insurance, as they will also retain a value within the market.

Gold Bullion And Proof Coins

There are subtle differences between gold bullion coins and gold proof coins however, which are significant in terms of their cost and value when considering selling gold. Gold bullion coins are valued and costed strictly on the levels of gold and precious metal they contain, whereas gold proof coins are designed and produced as specific collector items, so can carry additional value depending on the individual theme of the coin and the collector in question. All gold coins, whether they be classic or contemporary items, are very popular amongst private collectors and investors alike. These are viewed a being similar to currency rather than a commodity, as whilst its value and cost will dip and soar, gold and gold coins can never be rendered worthless or without value.

One of the most popular and valuable gold bullion coins on the market is the South African Krugerrand. There are coins available between 1967 (the year of the Krugerrands inception) and the current day, at an ever steady average cost of £860.00 (with an estimated gold cost of £800 per ounce). They are not aesthetically pleasing and nor were they ever designed to be, but they remain popular due to their predictable and reliable value over a distinct period of time. Another reason for its demand amongst investors and collectors is that it is an example of legal tender in South Africa, the Krugerrand can be imported into many countries world wide without the charge of import tax, VAT or duty.

A more economical and historic bullion coin renowned throughout the gold industry is the sovereign. The demand for these coins has experienced a sharp increase through the summer and peaked in October 2010, as collectors clamour to purchase these at the vastly reduced cost as compared to the Krugerrands. The sovereign range of rings is the most competitively priced within the gold bullion market, with a vastly superior profit to be made on resale as opposed to other coins. In addition to this, sovereigns are exempt from the burden of Capital Gains Tax in the UK, and are also a far more attractive and stylish design of coin for collectors. Their historical merit is also a significant consideration to a discerning collector.

Gold Bullion Bars

The popularity of physical gold bullion as an investment items was maintained through 2010, due in part to the global financial uncertainty and the fact the physical bullion does not depend on a suppliers pledge to pay. This removes a huge element of risk present in other services and commodities, giving an investor insurances as to the security of his capital. In addition to the bullion coins, gold bullion can be purchased in single bar format, and there are a surprising range of designs and choices available to the consumer. Quite often, however, if a specific type of gold bullion bar is required then the supplier will need to be informed as many simply sell bullion as an investment rather than a specific, collectable item.

The most in demand and commonly requested are Swiss gold bullion bars. Switzerland is renowned for its gold and banking, but many of its physical bars are rarer items. An example is the Swiss Volksbank bars, which are a rare commodity especially in the 1000 gram mould, and require much research to source from suppliers. Bars from the famous UBS Union Bank in Switzerland are also popular items that are often requested, due to the renowned name and the distinctive shape and dimensions, and these bars are also available in sizes ranging from 100 to 500 grams.

Continued Growth

A review of the price of gold in 2010 would have to conclude that, despite fluctuating financial fortunes in various national economies, gold has managed to maintain a steady inflation in unit cost and value across all its designs and formats. Whether scrap gold, gold bullion or gold coins, the steady increase in value and price is an indication of the special properties that gold as a material holds as an investment opportunity, and the gold industry is predicted to see further growth throughout 2011. It is easily sourced, is not susceptible to the risk of failure to supply or to pay, and due to government borrowing sees its value increase through times of economical hardship. If 2010 has proved anything, it is that there is no more reliable physical investment of capital than one that is made in gold.