Why Buy Gold?
You may wonder why people have been trading and buying gold for millennia. For literally thousands of years, gold has served humankind as the leading monetary metal.
Now, every day there is over-the-counter gold price market as well as electronic trading of gold futures that goes on in New York, London, or the Shanghai Gold Exchange in China.
Origins of Gold
There are a whole host of reasons that gold bullion was originally used for money: its yellow color and bright luster make it easily recognizable, of course.
In addition, it is the most malleable metal on earth, making it the easiest metal to melt down, refine, and manipulate into different shapes without losing any material. This is probably why it was chosen early on in ancient times for ornamental purposes.
But why did gold stand the test of time, as it were?
Gold Is Sound Money
The enduring appeal of gold as money is best explained by some of the metal's unique properties.
In addition to its high malleability that made it easy to fashion into different shapes, like coins, it is also extremely dense. This means that even a small volume of gold has a considerably high mass, making it useful for small pieces like coins.
Like all elemental metals, gold is also homogeneous, meaning it can be divided into tiny amounts and still maintain an identical composition in each fractional quantity. Obviously, if your coins are going to be standardized to the same weight and purity, this is a crucial quality to have.
Along with its density, this also means that gold is easily portable. All useful money must be portable, as precious metal bullion is, otherwise it would be much more expensive to move the money itself across long distances, which would defeat the purpose.
Eventually, after centuries of gold playing an important role in commerce, different cultures all around the world became familiar with the yellow metal. This gave gold an important quality of effective money, cognizability. This means that different people will all recognize the substance as money.
Because gold is a very scarce commodity in the earth's crust, people saw it as valuable, but cognizability refers to different people generally agreeing upon this value.
This also led gold to acquire another important quality of money, fungibility.A fungible asset is one that is readily interchangeable with another unit of the same commodity or good. For gold, this means that one unit of gold (whether a gram, ounce, kilo, or otherwise) is equal to the same amount of gold of the same purity. Pure gold is the same as pure gold wherever you go.
Diamonds are an example of a commodity that is not fungible because different diamonds will vary in color, clarity, and cut, and thus have different values.
Invest In Gold
Today, people decide where to buy gold coins rather than where to spend them, because they are used as an investment rather than as everyday money.
Buying gold is not a decision that most investors come to lightly. For one thing, it's a strategy that is frequently disparaged in the mainstream media for a whole host of reasons:
*gold is a "pet rock" that sits idle and doesn't "earn" you any money because gold offers no yield;
*gold a "barbarous relic" of the past and has no place in modern finance;
*there are more convenient alternatives to bullion in today's digital age, such as gold exchange-traded funds (ETFs).
For these reasons, gold is often seen as an alternative investment. It gets a fair amount of attention from contrarian investors who take a pessimistic view of the world economy's outlook. (For instance, those that reject the idea that the stock markets will simply go up forever.)
Gold vs. the Dollar
History has shown that the price of gold tends to perform well when the economy does not, and gold offers stability when economic forecasts and expectations are mixed. Crises and geopolitical tensions also have a tendency to drive investors and large firms to buy bullion as a safe haven from the resulting turmoil for global trade and commerce.
Another important concept that makes gold an alternative to traditional assets (like stocks and bonds) is that it exhibits a very strong inverse correlation to the U.S. dollar.
When the dollar falls in value, the price of gold usually rises by the same amount. This is the nature of a tangible asset like gold that has a history of monetary use. In many ways, you can think of a stronger gold price as an indicator that the relative value of the dollar is weaker, whether due to inflation or other factors that hurt consumer sentiment.
Finding Financial Stability
Compared to paper currencies (or digital numbers on the screen at a bank), stability is the important idea with gold and silver and, to a somewhat lesser extent, the other precious metals: platinum and palladium.
This relationship between gold and the dollar is why investors can hedge their portfolios with a modest allocation of gold bullion. (Many professional advisors suggest holding about 10% of one's portfolio in gold.)
The idea of the hedge is that if there is a downturn in the market, and the dollar value of one's other investments falls, the commensurate rise in the gold price will help to offset these losses.
Not only is gold not correlated with the performance of stocks and bonds, but it is also a "cash-equivalent," meaning it is a highly liquid asset that can be converted into cash at any time and in any place around the world. (Think of the classic cash for gold store.) The intrinsic value of gold is a universal concept.
What Is "Paper Gold"?
While there are many securities traded on Wall St that are tied to the price of gold, such as the aforementioned gold ETFs, it's important to keep in mind that these kinds of paper assets are merely claims on gold.
They are often likened to gold stocks (shares of mining companies), and may aptly be called "paper gold." If there is a significant fall in the market, such as a crisis like a run on the banks, these paper claims to gold will be just as impossible to redeem for actual metal as any other stock or paper note.
In effect, gold-backed paper investments defeat the purpose of owning gold because they aren't a tangible, physical asset. Many bullion investors who primarily buy physical gold like to say, "If you don't hold it, you don't own it." This is a wise saying indeed.
Buying Physical Gold
There are two main options for investing in physical gold: You can choose between buying gold coins or gold bars.
(Gold jewelry is not considered bullion because it is always a lower grade of gold, such as 18 karats, and because much of its value comes from the higher cost of labor and manufacturing the jewelry into unique shapes.)
Gold bars are exactly what they sound like: large "bricks" of highly pure gold.
In most cases, gold bars are composed of .999 fine gold (99.9% pure gold) or better. In fact, if a gold bar doesn't meet this standard, it won't be accepted by many major global gold exchanges, such as the London Metal Exchange (LME), and also cannot be included in one's precious metals individual retirement account (IRA).
Top Gold Refineries
Many of the world's most popular brands of gold bars come from renowned Swiss gold refiners like PAMP Suisse, Valcambi, or Argor-Heraeus. Several government mints, like Canada's Royal Canadian Mint and Australia's Perth Mint, also mint their own high-quality gold bars.
All of these facilities share a common reputation for being among the most technologically advanced leaders in the field of gold refining. For instance, the Royal Canadian Mint (RCM) has even pioneered what is known as "five-nines" gold—gold that is .99999 fine, or 99.999% pure! That means only 1 part per 100,000 in the alloy is a metal besides gold.
No matter which option you choose, the key when you buy gold and silver is to know the weight and purity of the bullion product you're purchasing, as well as the reputation of the refinery (whether private or government-operated) that produced it.
State mints and the prestigious private mints alike follow the ISO standards that meet the London Bullion Market Association's (LBMA) definition of "Good Delivery" status for gold bullion bars.
Why do people buy gold bars? They're often more convenient and readily accepted in large trades due to their exceptional quality, reliability, and better space efficiency.
Buy Gold Online
Gainesville Coins partners with major mints and refiners across the globe to bring you the best gold coins and gold bars available.
From the latest Chinese Gold Pandas and Perth Mint Lunar coins, to stunning bars from PAMP Suisse, to historic Pre-1933 U.S. and 19th-century world coins, Gainesville Coins should be your first choice for buying gold!
We both sell and buy gold and silver every day, creating a liquid two-way market, so keep that in mind when researching where to buy gold coins.
Gold: A Storage Of Wealth Throughout History
Mankind has used gold as a storage of wealth and a method of easily transporting wealth since the times of antiquity. (Long before any of us decided to buy bullion as an investment!)
Called “the money of kings,” it has also long been associated with luxury and power. Throughout history, gold has been used as money for a number of reasons: it is scarce; malleable and dense, therefore highly portable; recognizable and lustrous; and timeless, both retaining its intrinsic value and never tarnishing.
Today, gold serves as a preservation of wealth, and an “insurance policy” against systemic economic risks.
Gold For Sale at Gainesville Coins
At Gainesville Coins, we have something to suit every gold buyer's tastes, whether they buy gold coins for a collection or purchase gold bars as an investment.
For the investor looking for name recognition and maximum liquidity in their bullion, we carry legal tender gold coins such as the American Gold Buffalo, Canadian Gold Maple Leaf, and Chinese Gold Panda.
For those looking to minimize premiums, Gainesville Coins offers a wide array of PAMP Suisse and Credit Suisse gold bars, as well as gold bars from the Royal Canadian Mint and Perth Mint.
Investors looking for a little personality in their gold should be pleased with our selection of Pre-1933 U.S. coins, both graded and ungraded.
We also carry historic gold coins such as British Gold Sovereigns, French “Roosters”, and Mexican Gold Centenarios. Buyers looking for collectible bullion have several options at Gainesville Coins. We carry the Perth Mint Lunar coins, the Chinese Gold Panda, and many other proof and collectible gold coins.
Why Invest In Gold Bars?
Gold was first discovered as nuggets in stream beds. It wasn't long before ancient man figured out how to melt them together to make them easier to carry and store, giving birth to gold bars.
Bars are still the lowest premium option for buying bullion gold, even when they are the decorative Lady Fortuna bars from PAMP Suisse. Bars come in many sizes for the retail investor, from the tiny 1 gram to the hefty 1 kilogram.
Many bars come with a serial number stamped right on the bar, and are sealed together with an assay card that carries a matching serial number.
It's worth noting that all bullion dealers who sell gold buy it from the public as well, ensuring that customers have a ready buyer for their precious metals if they would like to convert some cash for gold.
Poured Gold Bars vs. Pressed Gold Bars
Gold bullion bars (and all bullion bars, for that matter) are made in two ways: poured, and pressed.
Pouring was the original way to make bars. Molten gold is poured into molds, then allowed to cool. They are then stamped with the weight, purity, assay mark, and refiner.
Pressed (or minted) bars are made from solid gold bar stock, cut at the precise point to produce uniform bars of an exact weight. The bars are then fed into a giant press, much like a coining press, where the weight, purity, assay mark and refiner are struck by dies onto the bar.
Pressed bars are much faster to produce than poured bars. This makes pressing the preferred method of making smaller bars (those under 1 kilo), though poured bars can also be found.
A gold round (or medallion, as it is sometimes called) is basically just a round bar that has been minted with a more intricate design. These are not nearly as common as their silver counterparts.
Buying Gold Coins
For thousands of years, gold has been used in trade between different cultures, helping to spread the idea of commerce (and various kingdoms or empires). Archeologists can use discoveries of buried coins to determine how far the influence of ancient empires extended.
While the days of circulating gold coinage are regretfully over, you can still hold gold coins as a preservation of wealth.
Gainesville Coins not only carries the latest in modern bullion coins from mints across the world, it also keeps a supply of formerly circulating gold coins, stretching back to the 19th century. Add the Liberty Head Eagles, Quarter Eagles, Half Eagles, or Saint-Gaudens Double Eagles to your collection for exposure to the classic Pre-1933 U.S. gold coins.
The selection isn't limited to U.S. gold, either. Select among French 10- or 20- franc coins, South African Krugerrands, British sovereigns from a number of different monarch’s reigns, and even Swiss francs or Dutch gulden from the 1800s.
Modern Gold Bullion Coins
In addition, the past three decades have seen an explosion of government-issued gold bullion coins. Produced by government mints with official legal tender status, these coins are struck from .999 fine gold or better specifically for investors.
The most well-known of these kinds of coins is the American Gold Eagle. The modern Gold Eagle (not to be confused with the $10 gold coin denomination that circulated before 1933) comes in a variety of sizes for different budgets and investing tastes.
Due to their high level of quality, liquidity, and trust, these bullion coins generally carry higher premiums than more generic gold bullion products.
The artistic designs of most gold bullion coins issued by national mints are also representative of the culture and symbols of the issuing country. A few other prominent examples are the Chinese Gold Panda, Canadian Gold Maple Leaf, Austrian Gold Philharmonic, and the Perth Mint’s Australian Gold Kangaroo.
Many people who own gold buy these coins on an annual basis in order to consistently grow their position in precious metals.