Investing in Gold, go for Gold Coins
Wikipedia defines a gold coin as a coin made mostly or entirely of gold. Gold has been used for coins practically since the invention of coinage, originally because of gold’s intrinsic value. In modern times, most gold coins are intended either to be sold to collectors, or to be used as bullion coins — coins whose nominal value is irrelevant and which serve primarily as a method of investing in gold.
Global Gold Demand : Current Scenario
International Monetary Fund (IMF) announced on its website that India has bought 200 tonnes of gold from a total of 403.3 tonnes that they had planned to sell. This transaction was completed during the period of October 19th – 30th 2009 with daily purchases at the prevailing market prices.
This potential sale of gold by the IMF was one of the lingering threats for gold prices. Now we have real takers for the IMF gold. India moved swiftly and bought 50% of the gold while China and Russia are considered more likely to grab the remaining IMF gold which is up for sale.
The point to note is that not only has the Reserve Bank of India (RBI) purchased gold – but it has done so at a price that was not at a discount to the spot prices. The message: the RBI is diversifying – it is moving some of its money from US dollar paper notes to gold.
Impact on Gold Prices
This will certainly lift the sentiments amongst those that believe in gold as the ultimate form of currency. The good news is that you don’t need to be a central banker to buy gold bullion. Essentially, there are three broad categories of gold investors:
- Those who wish to hedge uncertainty and possible financial disaster
- Those who wish to simply make a profit.
- Those who wish to gift/consume gold in form of jewelries
- Those who wish to combine more than one of the above
Your objectives will determine what you include in your portfolio. Once you have a handle on why you are buying gold, deciding what to buy becomes a relatively easy process.
Indian Gold Investor
Traditionally, Indians are more skewed towards consumption of Gold in form of jewelries. If you too belong to this category of retail gold investors, it may be a good idea as you can wear these jewelery on festive occasions, but purely from investment point of view it is not! Why?
Well the reason is pretty simple, when you liquidate your gold jewelries you loose out on the making charges and also on the wastage due to remolding. The buyer will be interested only in the net amount and purity of the Gold, ignoring the aesthetics of your jewelries.
How to go about buying Gold Coins?
Internationally, many specialist precious metal asset managers, such as Aurum Advisors (through their site Goldcoinsgain.com), help individuals, families, and institutional investors interested in preserving wealth and adding growth to their existing portfolio. They assist investors that have made the decision to buy bullion in the most appropriate manner possible :
- From getting you into precious metals at the right time,
- To getting you into the right coins or bars,
- To keeping you updated on the market conditions that may impact your precious metal’s portfolios overall value,
- To assisting you with your exit strategy
He has authored several analytical articles on personal finance in The Times of India and The Economic Times. Being a finance geek and having been involved with internet since the early days of the medium, he was a great help and source of guidance while formulating personalmoney.in. You can know more about Manish at ManishMisra.com
Disclaimer : Manish has agreed to write in his personal capacity. Views, opinions expressed in his articles are his own and do not necessarily reflect the views of his employer.PersonalMoney.in