We try to keep our investment advice very simple.
We cannot predict with any certainty what gold or any other commodity

or currency will do over short, medium or long periods of time.

Because of this we tend to avoid giving any definite advice or strong

opinion. There are some areas where we have considerable experience,

and feel we can safely give advice. Some of it may appear obvious,

but it is surprising how often we find ourselves repeating it.

This is one of the most obvious pieces of advice we give. But we

usually add "within reason". Generally the cheapest ways to buy gold

are bars, krugerrands or sovereigns. Of these three options, gold

bars can usually be bought for the lowest percentage premium over

gold, followed by krugerrands then gold sovereigns. Most other gold

coins are more expensive, and therefore better avoided, at least by

serious gold investors. You might think therefore that we would

advise gold bars, krugerrands and gold sovereigns as the best gold

investments, in that order. We believe however, that sovereigns are

worth paying a slight extra premium for, because of their smaller

size, and the historic and aesthetic values which you get for next to

nothing. Our advice will change with changes in the market, but

generally we believe the most effective ways of investing in physical

gold are as follows:-

Gold Sovereigns

Sovereigns are a smaller, more attractive, more historic, and

probably better known coin than krugerrands, therefore we believe it

is worth paying a slight extra premium over and above krugerrands, to

buy sovereigns. If you can buy sovereigns for about 2% differential

above krugerrands, we believe this makes them a better long term buy.

Currently for investors buying at least 50 sovereigns, the

differential above krugerrands is under 2%, sometimes as low as 1%,

and this makes them our first choice. Naturally this is slightly

subjective, and reflects our personal opinion. Consider though that

if you were to buy sovereigns at our 100 piece rate, you could resell

them singly at 10% profit, and be very competitively priced. You

could not make the same claim for krugerrands.
Sovereigns also have the advantage of being exempt from C.G.T.

(Capital Gains Tax) in the UK.

Krugerrands
Krugerrands are the best known of all the modern one ounce gold

bullion coin. They are available in greater quantities, and they can

generally be bought at lower prices than any other one ounce bullion

coins. This fact alone makes them the only 1 ounce bullion coin worth

considering. True they are not particularly attractive, and don't

possess much in the way of historical interest, but their production

quality is consistently high, and they are a very cost effective way

for small investors to buy gold. They are also easy to compare prices

of, as they contain exactly one ounce of fine gold.

Gold Bars
Although at a quick look, gold bars may seem the cheapest way to

invest on physical gold, there are some points worth noting, and some

drawbacks.
Our price for a single one ounce bar is usually exactly the same as

for a single one ounce krugerrand. Buy two krugers though, and our

quantity price breaks make krugerrands cheaper, and therefore a

better buy. Also while it is true that larger bars, such as one kilo

sell for a lower percentage premium than krugerrands, they are not as

easy to resell. Only a spe******t gold dealer is likely to give you a

good purchase price for gold bars, and then often with less

enthusiasm than for krugerrands, sovereigns, or other highly

marketable coins. This restricts your choice of buyer, and most

dealers would expect to pay slightly less for gold bars than for

coins, expressed as a percentage of their intrinsic gold value.
If you buy large bars such as one kilo, it is not very convenient if

you decide to sell a portion of it!
For very large investors, it may be worth considering London Good

Delivery Bars, but the first thing to note about these is that,

although they are usually quoted as being 400 ounce, or 12.5 kilo,

bars, there is a large tolerance in their permissible weight range,

from 350 to 430 ounces. There is also most tolerance allowed in their

purity, the minimum being .995 or 99.5% pure. Most "small" bars are

.9999 purity or 99.99%. Because of these factors, 400 ounce bars are

usually only traded between governments, central banks, and major

bullion banks, and other professionals.

Buy at Low Prices
It makes sense to buy gold when its price is low rather than high.

Many people are tempted to buy gold when they hear that the price has

risen. Although this can be the right action if the price continues

to rise, it is often better to buy after the price has fallen.

Conversely, if you believe that the time is right to buy, then don't

wait and try to buy it at the absolute bottom, you are very unlikely

to get it precisely right. We have heard it said many times that if

you can buy within 10% of the bottom and sell within 10% of the top,

you would be a very successful and happy investor indeed.


For more information, visit

Forex Trading Articles - Gold investment advice -
Added for discussion

rajhere