Buy gold now?
Everyone wants nothing but gold these days. You want to buy gold? Then you are on the right web site. We have compared several gold dealers for you. Even the pope is said to have bought a ton of gold recently. Gold dealers all over the world had to close their shops due to the enormous rush. As the daily telegraph reported on October 2nd, thousands of savers were queuing at ATS Bullion to convert their houses into gold bars. The gold rush started the day Lehman Brothers went bankrupt (credit crisis), as gold is known as one of the safest investments in times of recession, depression and inflation. Compared to the 1970s, where an ounce cost 60 US$, it was already 650 $ in 1981. There are several ways to investing in gold. Either there are Exchange Traded Funds, one can buy gold coins and other gold articles as for example the American Eagle or the Krugerrand or you can buy at BullionVault, where good delivery bars are stored in a vault. So you don't need to worry about neither insurance nor storage room. One way or the other it is no problem to sell the gold again at any time. The financial crisis started in the USA with the real estate crisis, also known as the big "credit crunch." Investors lost their confidence in the value of securitized mortgages which led to a injection of capital into the financial market by the States Federal Reserve and the European Central Bank. In September 2008 the stock market crashed and many banks, mortgage and insurance companies went bankrupt. So the crisis on the housing market is responsible for the situation we are all now in. The crisis affects many companies (banks, funds, hedge funds, pension funds) involved in finance and non-finance (Cars, DHL, etc.). According to many specialists the world is awaiting a recession in 2009. And what is the result of this financial crisis? Banks go bankrupt, our money is getting less and less worth as the central bank issues more and more of it to fill the gaps. The result is a global inflation. Gold is not affected by this inflation because it cannot be reproduced artificially. Its worth is driven by supply and demand and given the fact that the annual mine production is only 2.500 tonnes but the demand is 3.600 tonnes, it will be getting more and more worth over the next few years. That is the reason why more and more people prefer gold as an investment to funds. Even if a 100$ note is one day valueless, a gold bar or a gold coin will remain a solid currency. Rudolf Zaager, professor of the Zurich University thinks that there are worldwide still only 100.000 tonnes that can be extracted. So it is really a seldom and precious metal. In the following the main four reasons for gold as an investment:
- The world doesn't trust anymore in the US economy. The dollar is getting weaker and weaker, inflation is rising, more money is produced.
- India and the Middle East demand more and more gold for jewelry production.
- Extraction of gold and other precious metals is getting more and more expensive.
- The central banks tend to hoard gold, they don't want to sell it anymore.
What about silver as an investment? If you think of an investment in precious metals, silver is worth a thought. Why? Whereas gold is almost only used for jewelry, coins and bars and only redistributed, silver is really consumed by the industry. Silver has absolute unique characteristics for which it is so important to firms in medical research, microelectronic production, car production, photographic film and many more. It has the highest electrical conductivity and the highest thermal conductivity of any metal. Silver reflects light better than any other, for which it is used in mirrors and microscopes. As it is irretrievably consumed day by day, it is getting more and more worth over the time.
585 gold - what does that mean?As pure gold (24 karat) is quite soft and malleable, it is often alloyed with other metals to make it harder for jewelry. 585 gold means, that it has 585 parts pure gold and 415 parts other metals (copper, silver, platinum or palladium) in the alloy. White gold is usually alloyed with palladium or nickel.
How much is my gold worth?Many people ask themselves how much money their gold is worth. Therefore one has to follow the current gold price, shown on the charts on this web site. It may change within seconds. Here an example for the calculation: One troy ounce gold is 31,10 gram, which is today around $23,21 per gram or $23.208,01 per kilo. If you want to give in your chain or jewelry, you have to calculate the pure gold. Thus with 585 gold we have 58,5% pure gold, with 750 gold it is 75% pure gold etc.
Where is gold extracted?Most of the gold is extracted in South Africa, closely followed by Australia and the US. Worldwide an amount of 3.600 tonnes is needed - with bullish tendency. Especially states that experience an economic boom demand more and more gold. Thus it is not astonishing that the majority of gold goes to Asia, in particular to China.
Measurement of purity of gold alloysThe weight of gold is worldwide quoted in "ounces", a unit of mass, which means that one (troy) ounce is exactly 31,1035 grams/480 grains). The troy ounce always refers to 100% pure gold. Purity is the relation between pure gold and other metals in relation to the total weight, normally denoted in carat. One mustn't confuse gold carat with diamond carat, where carat is used as a weight unit (1 carat 0,2 grams).
|carat||purity||denomination||gold content in %|
|24 kt||999 pure gold||Gold 999||100|
|22 kt||916||Gold 916||91,6|
|20 kt||833||Gold 833||83,3|
|18 kt||750||Gold 750||75,0|
|14 kt||585||Gold 585||58,5|
|10 kt||417||Gold 417||41,7|
|9 kt||375||Gold 375||37,5|
|8 kt||333||Gold 333||33,3|
Buy gold or silver?
Is it better to invest in gold or silver? First of all we must say, that silver is basically needed in the industry, where it is consumed. That's the reason why the silver price depends strongly on cyclical fluctuations. For this reason the silver price rose significantly in the years between 2003 and 2007, because the industry needed a lot of it. As the silver market is by far smaller than the gold market, there is a higher volatility. On the whole the demand of silver rose from 1990 to 2007 for about 724 million ounces to 895 million ounces. Given this one might think that it is better to invest in silver instead of gold, because it is consumed irretrievably by the industry and getting more and more tight. This is correct but one mustn't forget that the silver price will go down with every recession, as the industry doesn't need it anymore for production. So it is rather appropriate for a long term investment, gold should be used to get your money into safety. Experts recommend to invest 5% of your fortune in silver and 10% in gold. Another point: With a current silver/gold-ratio of 70 you need 70 times more space for silver storage than for the same amount in gold.
What about Taxes?Trade with gold coins and bars in the EU is free of VAT! This doesn't apply to silver and other precious metals. US citizens may be taxed at 15, 23, 28 or 35 percent, depending on their investment.
What about diamonds as an investment?Diamonds are not as appropriate as an investment as gold. There's no official diamond market and the price depends on the goodwill of your dealer.
Methods of gold investments
How can I buy gold?
Physical gold can be bought in the bank of your choice or with online gold dealers. We have set up a comparison of different gold dealers where you can compare prices and delivery conditions.
What forms are available?
Gold can be bought in forms of gold bars with the bullion dealer of your choice. 585-gold.com recommends BullionVault. Gold bars are available in different sizes, the most common ones being 12.5kg or 1kg bars (1kg = 32.15072 troy ounces), even though there are many other sizes.
Gold coins can be bought with Perth Mint, the largest coin producer in the world. The most important gold coins are the Krugerrand, the Maple Leaf, Gold Eagle and Buffalo. Each of them weighs exactly one troy ounce.
Gold certificates are a good alternative to buying physical gold bullion. Again it is Perth Mint that holds the only government guaranteed gold certificate program in the world. The advantage: You don't need to worry about storage, insurance and transport.
Exchange-traded funds are traded like shares on the major stock exchanges. You own a certain amount of shares backed by gold, which is stored and insured.
With gold mining shares you don't invest directly in physical gold as a precious metal but on the mining companies that extract the gold. If the gold price rises, the value of the shares increases. It is not as safe as buying physical gold and it is more volatile.
Where can I buy gold?Actually gold can be bought in every bank. But this is mostly more expensive. Take your time and compare prices and possibilities. In our summary we have listed several gold dealers for you to compare.
How safe is gold as an investment?The gold amount in the world is restricted, as less and less mines are being exploited. Every year there's a deficit of round about 1000 tons which is compensated by sales of the central banks. But as the inflation increases, the central bank don't want to sell their gold anymore, so it's gaining more and more in value. The central banks in Russia, China and the Middle East demand more gold in order to decline their dependency on the dollar. All in all there will always be a rising demand in gold - and as a result its price will soar in future.
Gold and Inflation: Gold Price Forecast
Watch this video: Gold Price and Precious Metal Price Forecast.
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