Buying gold bullion is the most common practice of investing in gold. Very few people buy gold bars and jewelry. In some Asian countries people prefer buying gold jewelry but in the west, buying gold bullion or gold ETF is the most widespread and preferred choice. While buying gold bullion is extremely rewarding and a very sound investment strategy, there are some cautions you have to exercise. Also, you need to know a fair bit about buying gold bullion if you have never invested before.
Bullions & Coins Are Not Always The Same
Gold bullion is a gold coin. While all gold bullions are gold coins, all gold coins are not gold bullions. Gold bullions are made by sovereign federal governments of every nation. They are coins which may sport various icons or designs, such as the American Eagle gold bullion. These bullions are made in state or federal mints and are distributed through a network of registered and licensed bullion dealers across the country.
Coins can have various classifications. While gold bullions are also coins, the latter can be classified into collector’s coins and self made coins among others. Many families have a tradition of passing down gold coins through the generations. Before gold was regulated firmly, many people would melt the yellow metal and make gold coins. Such coins would be treasured, used or traded by such families or by goldsmiths of yesteryears. Any of these coins would not be considered as gold bullion. Thus, you should ensure when buying gold bullion that you buy from registered dealers and that you do not buy normal coins or collector’s coins.
Normal coins may cost less and collector’s coins would cost more, both of which may sound acceptable to you but investing in coins or collector’s coins thinking that you are buying gold bullion is not a healthy scenario to be in.
Cost Of Bullion Is Not Cost Of The Metal
When you are buying gold bullion, you are paying for the metal and you are paying the fabrication fee. Usually the fabrication fee is up to 5% of the value of the metal if melted. Hence, for the cost of gold bullion whose melted metal value is $100, you should expect yourself to pay up to $105.
Be Aware Of & Pay The Fair Price
There are many dealers or bullion traders who would want to charge you more than what the market is demanding at a point in time for gold bullion. Before buying gold bullion, check market prices, the value at which gold is trading and what different dealers are charging. It is the best way to get the best and also the fairest price.