Buy Gold Bullion - Why Gold Bullion Is The Best Way To Invest In Gold
If you've paid much attention to the news lately
, you'll have noticed that gold is a hot topic, maybe the hottest. Its spectacular rise in price has taken many by surprise, but for those in the know, it's perfectly natural. So why are so many investors flocking to buy gold bullion?
The fact is that gold is the ultimate safe haven for investors. When people lose faith in paper money and conventional investments such as stocks and bonds, it's to gold they flock. If you factor in gold's limited supply and the demand from industry and jewellery makers to buy gold bullion, you'll understand why pundits say the only way for gold is up. So how can you take advantage of the amazing gold market?
The fact is you have a wide range of choices when it comes to taking advantage of gold. Here's a look at your options. We can separate them into type main types - the first is where you own your wealth on paper and the second is where you actually take possession of the yellow metal.
One popular way to take advantage of the demand for gold is to buy stocks in mining companies. Obviously if they're mining more gold, their earnings are up and so are your dividends as well as the price of the stock. The problem is knowing which companies to invest in.
Another option is through the use of exchange traded funds (ETF). These represent physical gold bullion held in trust in bank vaults. These can only be traded during stock market hours and there's a storage charge for the gold.
Then there's digital gold currency or e-gold which is becoming increasingly popular. The problem is that there are no specific financial regulations for this product. And as the dealers are not banks, they don't have to comply with banking regulations.
Next, you can invest in
gold bullion via Self-Invested Personal Pensions (SIPPs). These are a new type of personal pension plan that hold investments until you retire and allow you to manage their own fund by investing in asset classes of their choice. One benefit is that you can claim up to 40% income tax back depending on your income tax band. You're allowed to hold investment grade gold in a SIPP in the form of a bar, or of a wafer, of a weight accepted by the bullion markets. It must be stored with a secure third party and you can't take possession.
Finally there are gold options and gold futures. To deal in these, you have to handle a complex, fast-moving market. You need to be a hands-on investor and it's not for those who can't handle risk and uncertainty. Better leave this one to the professionals.
Now we'll look at personally-owned gold investments. Essentially you have the choice of jewellery, coins and gold bars.
Jewellery makes for wonderful keeps sakes and souvenirs but the cost of craftsmanship and design makes it a poor investment vehicle. In addition, pure gold is too soft for most jewellery so some alloy is used. This means when you come to sell your gold jewellery, it will have to be assayed which adds to transaction costs.
Another popular way to invest in gold is through coins like
Krugerrands, the American gold eagle or the Canadian coins. While these make fine keepsakes and have a definite value, they're not efficient investment vehicles owing partly to the costs of workmanship.
Finally, you can buy gold bullion bars. Here you're acquiring investment grade gold at the spot price. This is the most cost effective way to invest in gold. In the UK, you can order online for next day postal delivery. And when it comes to sell, the market is extremely liquid. What's more, buying investment grade gold bullion for investment is stamp duty free and tax free (VAT exempt) in the UK and EU due to the EU Gold Directive of 2000.
Buying gold bullion was long a difficult business and it was hard to get clear information. The internet has changed all that, brought transparency to the proceedings, and reduced transaction costs and hidden fees.
Buying gold and silver bullion online for UK home delivery is now a straightforward procedure. Just visit the website of a reputable online bullion dealer, peruse the offerings and place your order. Your bullion will arrive in a day or two by insured Royal Mail.
by: Michiel Van Kets
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