Last Updated : 05 August 2009 at 15:10 IST
Gold investment plans to boost your money
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MUMBAI (Commodity Online): Demand for gold is widely spread around the world. And people are buying gold like never before following the recession. East Asia, the Indian sub-continent and the Middle East account for almost 70% of world demand.
Around 55% of demand is attributable to just five countries — India, Italy, Turkey, USA and China — each market driven by a different set of socio-economic and cultural factors.
So, people who want to invest their money in gold now are scurrying for proper advice on how to put their money in the yellow metal.
Here are a few steps for you to invest your money in gold. Gold investment can take many forms, and some investors may choose to combine two or more of these for flexibility. The distinction between buying physical gold and gaining exposure to movements in the gold price is not always clear, especially since it has always been possible to invest in bullion without actually taking physical delivery.
If you are thinking about investing gold, it is worth giving the same consideration to your purchase as you would to any other investment.
COINS AND SMALL BARS
The first gold coins were struck by King Croesus, ruler of Lydia in western Asia Minor from 560 to 546BC, whose wealth came from the gold from the mines and sands of the River Pactolus. Gold coins have been legal tender ever since. Bullion coins and small bars offer private investors an attractive way of investing in relatively small amounts of gold. In many countries, including the whole of the European Union, gold purchased for investment purposes is exempt from Value Added Tax.
Investors can choose from a wide range of gold bullion coins issued by governments across the world. These coins are legal tender in their country of issue for their face value, rather than for their gold content. For investment purposes, the market value of bullion coins is determined by the value of their fine gold content, plus a premium or mark-up that varies between coins and dealers. The premium tends to be higher for smaller denominations. Bullion coins range in size from 1/20 ounce to 1000 gm, although the most common weights (in troy ounces of fine gold content) are 1/20, 1/10, 1/4, 1/2 and 1 ounce. It is important not to confuse bullion coins with commemorative or numismatic coins, whose value depends on their rarity, design and finish rather than on their fine gold content. Many dealers sell both.
Gold bars can be bought in a variety of weights and sizes, ranging from as little as one gram to 400 troy ounces (the size of the internationally traded London Good Delivery bar). Small bars are defined as those weighing 1000g or less. According to industry specialists Gold Bars Worldwide, there are 94 accredited bar manufacturers and brands in 26 countries, producing a total of more than 400 types of standard gold bars between them. They normally contain a minimum of 99.5% fine gold. The Gold Bars Worldwide website provides a wealth of additional information regarding the international gold bar market.
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