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5 ways to own gold
5 ways to own gold
We’ve already talked about gold being a solid investment (with some caveats), but when it comes to actually purchasing some, are you aware of the multiple options available? If not, read on…
Coveted for their rarity and historic appeal, old and rare gold coins still have an intrinsic precious metal value. The British gold-sovereign is the most widely owned and traded semi-numismatic gold coin in the world (and it’s exempt from Capital Gains Tax!). These coins will generally go up and down in price faster than the gold price in a market so are more attractive to investors.
Despite the fact that these are essentially ‘a promise to pay the buyer’, there are no recurring shipping, custodial or insurance fees so it is an attractive option. The unallocated nature of the gold (you are not technically the legal owner) is to be weighed against the flexibility of being able to transfer to an allocated account at any time. The important thing is to find a reputable seller (i.e. the Perth mint is government backed insured by Lloyds of London).
Allocated accounts involve ownership of actual gold that can instantly be sold. The history, credit rating and security of the account provider is of utmost importance. Gold Money and Bullion Vault are two respected providers who will account for and audit every gold bar.
The term paper gold means you have a physical piece of paper saying you are a creditor of a company that owes you a specific amount of gold. They are issued by banks and mints, pool accounts, futures accounts and the NYSE listed exchange-traded fund. You can also get one if you invest in a mining company looking for gold
5.Gold exchange traded-funds (ETFs)
These are essentially shares in gold following the stock market model. Two of the most popular are SPDR Gold Shares (NYSE:GLD) and Gold Bullion Securities (LSE:GBS). There will be an annual administration fee (0.4-0.5%) but they can be bought and sold through stockbrokers.
Investing in physical gold (that you keep in a location of your choice) isn’t an ‘investment’ per se… it’s more like an insurance policy. As a finite currency held by most central banks it is very resilient in the face of economic crises. However, as a profit-making investment it trails behind most assets on the market. Buy it to pass on to your kids.
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