The Basics of Gold Bullion Investments

Gold bullion is defined as that gold whose purity ranges from 22 to 24 karat.
Gold markets sell it in the form of 1 ounce, 10 ounce, 100 ounce, and 1,000
ounce bars. Gold bullion is a tangible asset that is undeterred by the downs
in the economy. In contrast, the profits of gold mining stocks are based upon
the spread between the costs required for the gold-mining and the value of the
gold that is excavated from the ground. The costs for such mining depend upon
geo-political factors including tightness in the credit market, investor sentiments
etc. Thus a gold bullion stock is more preferred on an investment portfolio as
compared with a gold mining stock even if one considers it on a long-term basis;
taking due consideration of the risk factors involved. Even in an extremely rickety
economic scenario, it is gold bullion in the form of a coin, bar, jewelry, etc. that
will stand strong and benefit its investors.

The gold bullion market is a medium through which trading of pure gold is done
by traders; mostly over the counter with concentration base in the London area.
This market is open throughout the day and its rate of turnover is very high as
gold is considered as a useful hedge during times of inflation. Transactions
in the gold bullion market are mostly done through electronic media or via the
telephone. As compared with various other gold-investing methods like mutual
funds, exchange traded funds, futures and options, gold bullion investing involves
lower flexibility as far as trading is concerned on account of the limitations
in buying or selling of precise amounts of the gold coins and bars that have
established sizes. In addition, storing and insuring of gold bullion is a costly
affair. Despite the same, gold bullion investing is preferred first as one can build
a strong base in one’s investment portfolio through it. After this, putting money
in the speculative gold mining stocks can be considered. Another way in which
gold bullion investing can be done is through purchase of gold bullion securities.
These are potential long term winners.

In order to help investors identify different gold securities, a unique symbol
referred to as the gold bullion ticker is used. Its first portion represents the stock
exchange at which it is traded while the second portion is the representation of
the gold bullion fund. Such funds are directly related to the price of gold bullion.
As with any investments, in this case as well, careful research into all the gold
bullion securities is very necessary before the decision of investing in the shares
is taken. Details like the company’s headquarters and location areas for storage
of gold in the physical form need to be understood. The reason is that if the
said area is unsafe on account of it being politically insecure or affected owing
to non-compliance of eco-friendly norms, then investments here would not be
worthwhile.

Gold bullion investments are advantageous as one actually owns the amount
of gold one invests in. Gold bullions have universal monetary value and high
liquidity. No wonder then that they are referred to as universal currency.