Gold coins are one of the oldest forms of money. The first gold coins
in history were coined by the Lydian king Croesus in about 560 BC, not
long after the first silver coins were minted by king Pheidon of Argos
in about 700 BC. Gold coins then had a very long period as a primary
form of money, only falling into disuse in the early 20th century.
Most of the world stopped making gold coins as currency by 1933.
However, gold-colored coins (not made of real gold, Bullion coins))
have made a comeback in many currencies. Many countries, including
the entire European Union states exempt invested gold from VAT (Value
Added Tax). There are many forms of gold investment, the two most
famous being gold bars and bullion coins.
Gold Bars
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Gold bars are classified into two different types, cast and minted,
based on their method of manufacturing1. Cast bars are made by
pouring molten gold into an ingot mold to help the gold to take a
form. Minted bars are made from gold blanks that have been hand cut
to the required dimensions from a flat piece of gold. Markings are
almost always applied by presses. ChipGold is a relatively new form
of gold bar consisting of a small ingot (1-20 grams) in a sealed and
certified package the size of a credit card. One troy ounce =
31.1034768 grams. Thus if gold was at US $600 per ounce, a gold gram
would be worth just under US $20.
Bullion Coins
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As an investor, you can choose from the many bullion coins offered by
many governments. These coins, are a legal tender of the government
that issues them. As an investor, the value for your is in how much
gold that coin contains with the extra mark-up that might exist for
such coin.
How Invest In Gold
Completely free of credit risk, although it bears a market risk gold has always been a secure refuge in unsettled times. Its ?safe haven? attributes attract wise investors. Gold has proved itself to be an effective way to manage wealth.
For at least 200 years the price of gold has kept pace with inflation. Another important reason to invest in gold is its consistent delivery within a portfolio of assets. Its performance tends to move independently of other investments and of key economic indicators. Even a small weighting of gold in an investment portfolio can help reduce overall risk.
Most investment portfolios are invested primarily in traditional financial assets such as stocks and bonds. The reason for holding diverse investments is to protect the portfolio against fluctuations in the value of any single asset class.
Portfolios that contain gold are generally more robust and better able to cope with market ncertainties than those that don't. Adding gold to a portfolio introduces an entirely different class of asset.
Gold is unusual because it is both a commodity and a monetary asset. It is an 'effective diversifier' because its performance tends to move independently of other investments and key economic indicators.
Studies have shown that traditional diversifiers (such as bonds and alternative assets) often fail during times of market stress or instability. Even a small allocation of gold has been proven to significantly improve the consistency of portfolio performance during both stable and unstable financial periods.
Gold improves the stability and predictability of returns. It is not correlated with other assets because the gold price is not driven by the same factors that drive the performance of other assets. Gold is also significantly less volatile than practically all equity indices.
The value of gold, in terms of real goods and services that it can buy,has remained remarkably stable. In contrast, the purchasing power of many currencies has generally declined.
Traditionally, access to the gold market has been through: investment in physical gold, usually as gold coins or small bars,or, for larger quantities, by way of the over the counter market; gold futures and options; gold mining equities, often packaged in gold-oriented mutual funds.
Both Luat Tran Van & Scott Michaels are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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