Selling Gold Ingots
|
Buying and selling gold ingots, bars, and coins may begin as a hobby. But unlike most hobbies that end up costing a small fortune, this one just might grow into a small fortune. The hobbyist who makes savvy decisions regarding both purchases and sales could become, over time, a serious investor with a solid financial investment. Like any undertaking, though, and perhaps more than most, it's important to know a few basics before jumping into the golden world of bullion. Whether hobbyist or investor (or perhaps a little of both), careful research increases one's opportunity for success in this type of venture.
Fascination with gold stretches far back into history, perhaps because it is geologically scattered throughout the world both in mines and in streams. The precious metal is mentioned in Scripture's account of the creation. "And a river went out of Eden to water the garden; and from thence it was parted, and became into four heads. The name of the first is Pison: that is it which compasseth the whole land of Havilah, where there is gold; and the gold of that land is good: there is bdellium and the onyx stone" (Genesis 2:10-12). Known to the Incas as "tears of the sun" and the ancient Greeks as a "dense combination of water and sunlight," this malleable metal was associated with deity, royalty, and power throughout the ancient world. The famed and controversial treasures of Troy, Priam's Gold, date back to about 2,000 B.C. This treasure trove was found in the mid- to late 1800s by a German archaeologist Heinrich Schliemann, who loved Homer's epic poems, The Iliad and The Odyssey. The first coins date to 670 B.C. and Julius Caesar used golden coins to pay the Roman soldiers.
The gold bars for sale on the market will be either minted or cast from a mold. The minted bars are stamped out in designated sizes and shapes with any marks created during the minting process. Coins are stamped out in a similar process. The molded bars are known as ingots and have a rougher appearance than the minted ones. An ingot's markings include any foundry or manufacturer's marks, a notation of the purity, and a registration number. The gold bars for sale usually have standard weights in grams, troy ounces, or kilograms. The largest are the London Good Delivery bars which weigh 12.5 kilograms, or 400 ounces. These are mostly stored by central banks, governments, and large institutions. A relatively new product, called ChipGold, is a sealed and certified ingot which is about the size of a credit card that weighs from one to twenty grams.
When buying or selling gold ingots, both the hobbyist and the investor need to be aware of weight, purity, and the premium. Most English-speaking countries, such as the United States, the United Kingdom, and Australia, use the troy ounce weight. Slightly heavier than the more familiar liquid ounce, a troy ounce equals 31.1034768 grams. A kilogram is equivalent to 1000 grams or 32.15074656 troy ounces. Purity is expressed in terms of either a percentage or as thousandths or ten-thousandths. For example, the London Good Delivery bars mentioned above have a purity of 99.5%. The purity of a ChipGold ingot is expressed as .9999. A premium is the overhead cost added to the golden piece's intrinsic value. This includes the manufacturing cost, possibly a dealer's mark-up, and any insurance and/or shipping and handling fees.
Experts suggest buying the largest golden bar weight that a collector can afford so that the premium is less per ounce. This may not be practical for the collector who plans to offer gold bars for sale at a later date. Those selling gold ingots in the future have an incentive for purchasing smaller units even if that means paying a higher overall premium. Pieces weighing one gram or less usually are not good investment prospects because of the premium is high per the weight. However, they can make great gifts for children, grandchildren, and novice hobbyists. Some experts suggest that the collector think of one ounce coins as being circular bars. Because of their variety and large numbers, golden coins are often more competitively priced than other options. A rare coin's value exceeds its gold content and can be a great investment.
Investors and dealers often talk about the three Ps when offering gold bars for sale to others: portability, privacy, and permanency. These three qualities enhance the investing appeal of the various forms of this precious metal. Unlike an asset like real estate, bars and coins can be easily moved from place to another. The collection is private, unlike assets kept in financial institutions or in brokerage accounts. Paper assets such as stocks and bonds can lose their value, but precious metals have intrinsic value even though the daily price of gold fluctuates. Because of its intrinsic value, gold and other precious metals are hedges against economic ups and downs, such as both inflation and deflation, and political uncertainties. A country's currency may become worthless after a coup, but precious metals and jewels retain their worth even under such dire circumstances as these.
Whether buying or selling gold ingots, bars, or coins, both the collector and the investor needs to understand the basics of the manufacturing processes, weight, purity, premium, and the three Ps of portability, privacy, and permanency. In addition, the golden history of this precious metal is fascinating and enhances the appreciation for the items in a collection.
|
|
|
|
