Tuesday June 15, 2021

The Gold investment options in detail

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The most conservative way to invest in gold is to buy physical gold such as coins, bars or vault gold. Coins can be bought at any bank, at coin dealers and even on the internet. The price depends on the daily changing gold price. Large coins are particularly suitable as an investment, as smaller coins are relatively more expensive due to the minting fees. The following coins are particularly popular - and also easily available:

    Krugerrand - South Africa
    Maple Leaf - Canada
    Vienna Philharmonic - Austria
    Panda - China
    Nugget - Australia
    Britannia - Great Britain
    American Gold Eagle

The well-known gold ducats, crowns or special commemorative coins are more suitable for coin collectors or as gifts. The disadvantage of investment gold in the form of coins is the comparatively high risk of theft and loss. If you want to minimise this risk, for example by renting a safe deposit box at the bank, this is associated with costs that naturally reduce the return - and this is relatively difficult to foresee anyway due to the lack of interest.

Gold bar investment

The same problems basically exist with gold bars as with coins, but the minting costs are not quite as high here, and bars are also available in larger denominations. However, you should bear in mind that bars can only be redeemed as a whole - so if you decide to buy a large bar, you will have to liquidate your gold investment completely, even if you only need part of the value.

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Another variant of physical gold is vault gold. Unlike coins and bars, which are stored privately or at the bank, vault gold is professionally stored in high-security vaults. As a rule, the buyer does not have free access to the gold; delivery usually has to be requested. The advantage of vault gold over other investment gold is that it is stored very securely and is usually also insured against loss. However, this advantage comes at a higher cost, which reduces the return.

Gold funds exist in numerous variants. The funds invest primarily in commodity companies such as gold mines, silver mining companies or copper plants and hope for a positive development of the companies. If gold prices rise, the funds also gain in value. However, they have to reckon with sometimes high price fluctuations and relatively expensive issue premiums.

Trading in gold shares is recommended exclusively for professionals in https://exness-ar.com/ area. This is because shares in commodity-producing companies are exposed to massive fluctuations in some cases and are therefore naturally very risky. Moreover, they are usually issued in foreign currencies, which brings additional uncertainty into the investment. Thus, gold investment in the context of shares is to be classified as highly speculative. The advantage over coins and bars, however, is the possibility of generating profits even in times of low price fluctuations at a high gold price level.

Introduction of the gold price

The price of gold is quoted in US dollars per ounce (equivalent to 28.35 g) or troy ounce (equivalent to 31.10 g). The official gold price, also called the fixing price, is set in London. The current price is determined twice a day on weekdays, at 11:30 CET and at 16:00 CET (opening of the US stock exchanges). It is determined by the five major banks of the London Bullion Market Association, to which Deutsche Bank also belongs.

Various factors are taken into account in the calculation. On the one hand, of course, supply and demand play a major role, but the price is also influenced by the US dollar exchange rate, the oil price and speculation about future developments. Above all, the US dollar is closely linked to the gold price - the weaker the dollar, the higher the gold price. The USA also has one of the largest gold reserves in the world. 

 
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