Gold throughout history had been used as money and has been a relative standard for currency equivalents world wide. For more than 2000 years people have owned and invested in gold for a variety of reasons. Gold has been used as a secure storehouse for investment over time and a way to pass wealth from one generation to another. Because of its international value gold holds the same value from country to country around the world. Since 1919 the price of gold has been dictated by London gold fixing, a twice daily telephone meeting of representatives from five bullion-trading firms of the London bullion market. Gold is traded continuously throughout the world based on the intra-day spot price, derived from over-the-counter gold-trading markets around the world (code”XAU”). There is peace of mind that comes from owning a hard asset that you can hold in your hand. Gold has survived inflation, deflation, financial crises and natural calamities. For centuries, owning this metal has provided a storehouse of value and has helped assure a measure of wealth for future generations. Let Richardson Gold and Silver Exchange and Frisco Gold and Silver Exchange help you start your investment in gold Bullion. Bullion The word bullion comes from the old French word bouillon, which meant “boiling” and was the term for a mint or melting house. In recent years, the term bullion has also been used to describe gold bars, silver bars, ingots or bars of base metals such as copper, nickel, or aluminum. It is also used to refer to a metal piece shaped in the form of a coin or a bar and plated with a precious metal. Bullion refers to precious metals in bulk form, which are regularly traded on commodity markets. The value of bullion is typically determined by the value of its precious metals content, which is defined by its purity and mass. Market bodies or legislation regulates the specifications of bullion. The minimum purity for gold bullion, which is treated as investment gold with regards to taxation, is 99.5% for gold bullion bars and 90% for bullion coins.
There are several reasons that you might choose to purchase bullion as an investment, bullion is:
- considered a “safe haven” asset – a potential hedge against inflation and an eroding dollar
- recognized as a monetary and financial asset worldwide • part of a portfolio diversification strategy recommended by many experts
- able to be passed on to children and grandchildren
- a tangible reminder of past achievements and civilizations Setting records – some experts believe gold may see new highs in the future.
The most popular 1-ounce gold coins to collect and invest in for your portfolio are Krugerrands, Canadian Maples, and U.S. Eagles.
More About Bullion
Gold and silver coins and bars are made available to individual investors in sizes ranging from 1 gram to 1 kilogram, including the popular weight of 1 Troy ounce (31.1 grams). Examples of these weights include gold and silver bars, plus coins like the American Eagle, American Buffalo, Canadian Maple Leaf, South African Krugerrand, etc. The price that Richardson Gold and Silver and Frisco Gold and Silver charge for bullion and coins takes into account the current spot price for gold or silver, additional costs related to refining the metal to remove impurities, manufacturing usable form factors (minting of the coins and pressing or pouring of the bars), transportation and distribution, administration, and other expenses related to the precious metals supply chain.
The result is a product that typically trades between 2% and 15% higher than the spot price of the metal on the Commodities exchange market (CoMeX). This should not be mistaken as sales commissions, transaction fees, or dealer margin. The percentage over spot is generally less as the unit size increases (a 1 kilogram bar has a lower price over spot than a 1 gram bar does – since it costs far less to make one large bar than it does to make 1000 small bars!) and is also generally lower for gold than for silver. When acquiring precious metals bullion as an investment, you should try to buy as close to the spot price as possible. Since the liquidation price is usually based solely on the total weight of the gold, the premium over the market price on the front end can eat into your profit when you go to sell.
Karats of Metal
When jewelry is made from metal gold or silver, the items purity is described in terms of karats (abbreviated kt or K). The gold jewelries are made with different karat, such as 10 karat, 12 karat, 14 karat, and 18 karat. High karat gold jewelries are more expensive, because they have a higher percentage of gold or silver content in their manufacture. What does the “karat” mean? What is the karat? Karat is a unit of purity for gold alloys, rather than weight. The word “karat” is from the carob seed, which was used as balance scales to measure the weight of gold in ancient Asian bazaars. What is Gold Karat? Since the pure gold is too soft to make jewelries. Gold jewelries are usually an alloy, which means the gold is mixed with other metals, such as silver, copper, or zinc. Pure gold is 24 karats. A unit karat of gold is equal to 1/24 part (4.1667%). The gold karat shows how many parts of gold and how many parts of other metals are in gold or silver jewelry.
The following chart shows the differences between the different karats, and also shows the percentage of gold and other metals.
Gold is soft metal, so high-karat pieces are sometimes easily damaged. A 24 karat item is generally reserved for display or ceremonial use. In stores, most gold items have a karat rating in the range of 9 to 18 karats. In the US, the minimum karat value for gold jewelry to be sold is 10, but in the UK 9 karat is more common. In additional, gold purity does not affect its weight! Different color of gold are mixed with different other metals. For example, gold mixes copper is called red karat gold. What’s the difference between Karat and Carat? We are often confusion over the differing use of “carat” and “karat”. The Karat is a gold unit for purity, and Carat is a unit for mass, which is used for measuring the weight of gemstones and pearls (1 carat is equal to 200mg). However, carat and karat are usually used interchangeably in some countries. How to test the purity of gold? There are two common methods to test gold for its purity, Acid Test Kits and Electronic Testing Kits. However, any acid testing will lose some small amount of gold.