Gold Bullion Investing Today The Judicious Approach

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Gold has always and always will be considered a measure of riches and power

. From ancient Egypt and Babylon to modern day America, gold has consistently attracted attention. It is the most important of precious metals.

Gold and silver stored in a bulk form, such as ingots (bars) or coins, is called bullion. Gold bullion has a value in accordance with the amount of gold (based upon mass and purity) in the coin or bar. In addition, certain scarce gold coins possess numismatic value since collectors may want them and are ready to pay a premium to obtain and own them.

Gold always has been a "hedge" against inflation or the reduction in value of a currency. Being a hedge, gold's value is fixed whereas the buying power of a currency varies. When the currency's value declines the price of gold in that currency increases. Hence, we have observed the price of gold in dollars rise approximately 16% each year over the last decade.

While you may think the U.S. dollar is "as good as gold," this is not the truth. In 1971 President Nixon cut off the gold backing from the dollar. This made the dollar a common fiat currency with not much supporting it other than the full faith and credit of the United States government. The value and buying strength of the dollar is merely what worldwide trade says it is.

Gold, however, has kept its buying power for hundreds, or even thousands of years. One ounce of gold could purchase the most luxurious toga in ancient Rome. It still buys the finest suit of clothes in the present day. This consistency of value is what makes gold so precious to individuals.

You most likely know about the monetary crises in Greece due to the government's extreme spending and large debt. Because the overall economy of Greece is in turmoil, Greeks are purchasing gold on a massive scale. The British Mail journal states that investing in gold "is the most practical course that the unfortunate Greeks can take as individuals." This is exactly what their grandparents did during and in the aftermath of World War II as extreme overprinting of European currencies resulted in widespread inflation.

Gold coins are minted in various sizes. Most commonly seen include the 1.0, 0.5, 0.25, 0.10, and 0.05 ounce sizes. The American Eagle gold coins, for example, come in 1.0, 0.5, 0.25, and 0.10 ounce versions. The 1.0 ounce Eagles are about the dimensions of a half-dollar and the 0.10 ounce Eagles are around the dimensions of a dime.

Normal gold bars weigh from a gram up to a kilogram, or even 100 ounces (about three kilograms). Large bars are often times used in trade in professional bullion markets such as those in New York, London or Zrich.

Gold is in demand and could always be needed. As well as being a hedge to protect against currency difficulties, gold is needed in expensive jewelry, modern technology and medical treatment. The existing strong demand for gold will certainly continue to develop in the foreseeable future.

by: henry r murphy

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