Between Nov. 30, 2007, and June 1, 2009, the S&P 500 index fell 36%. The price of gold, on the other hand, rose 25%. Do the quick math and you'll see that gold outperformed stocks by more than 60 percentage points. This was the most recent example of a material and prolonged stock downturn, but it's also a particularly dramatic one because, at the time, there were very real concerns about the viability of the global financial system.
A. The short answer is 'When you need it.' Gold, first and foremost, is wealth insurance. You cannot approach it the way you approach stock or real estate investments. Timing is not the real issue. The first question you need to ask yourself is whether or not you believe you need to own gold. If you answer that question in the affirmative, there is no point in delaying your actual purchase, or waiting for a more favorable price which may or may not appear. Cost averaging can be a good strategy. History tells us that panics, mania, crashes and collapses are as common to financial history as thunderstorms to placid summer afternoons. The real goal is to diversify so that your overall wealth is not compromised by economic dangers and uncertainties like the kind generated by the 2008 financial crisis.
The Chinese Mint is the official sovereign mint of the People’s Republic of China and produces the nation’s official gold bullion coin. Introduced in 1982 with 1 oz, 1/2 oz, 1/4 oz, and 1/10 oz coins in .999 pure gold with the image of a Giant Panda on the reverse. In 1983, the Chinese Mint increased the offering to feature a 1/20 oz coin as well. Designs for the Chinese Gold Panda include:
One of the most frequently asked questions is, "What gold bar should I buy?" In addition to the size of the gold bar having an impact on overall price and premium above the fluctuating gold spot price, the gold bar’s mint may affect a gold bullion bar’s pricing slightly. A highly recognizable government gold bar may sell for a few dollars more than a like kind gold bar from a less recognizable privately minted gold bar when you decide to sell your gold bar back to a gold bullion dealer. A gold bullion bar guaranteed and produced by a sovereign national mint such as the Royal Canadian Mint (RCM) will typically have a higher premium or slightly higher price when buying, but government guaranteed gold bars typically receive a higher buy back premium when you go to sell your gold bar back to gold dealers or other investors. Similarly, a gold bullion bar from a highly recognizable private gold mint may sell for a slightly higher premium than a smaller less recognizable private gold mint. Live buyback prices for gold bars can be found online on the corresponding product page.
Proof coins are special editions struck for collectors and often mounted in a special case. The dies used to make them are often finely polished and yield particularly pretty coins with mirror finishes. Proof editions are usually valued more highly than regular coins -- by collectors. The premium you pay for proof coins may be inflated and may disappear, depending on the market. So, for investment purposes, stick with regular coins.
In addition, most gold miners produce more than just gold. That's a function of the way gold is found in nature, as well as diversification decisions on the part of the mining company's management. If you are looking for a diversified investment in precious and semiprecious metals, then a miner that produces more than just gold could be seen as a net positive. However, if what you really want is pure gold exposure, every ounce of a different metal that a miner pulls from the ground simply dilutes your direct gold exposure.
Over the years, Gold price history has shown that the global economic climate primarily determines the value. When the largest economies in the world, including the United States, are experiencing growth, demand for Gold goes down as investors are more willing to try riskier options such as the stock market. When leading countries suffer a recession, the demand for Gold goes back up due to its historic role as a safe haven investment. As seen many times in the history of Gold, prices will once again go up. This relationship between historical rates and the current value of Gold has been viewed many times over the years and is a central determining factor used by market analysts.
Even those investors focused primarily on growth rather than steady income can benefit from choosing gold stocks that demonstrate historically strong dividend performance. Stocks that pay dividends tend to show higher gains when the sector is rising and fare better – on average, nearly twice as well – than non-dividend-paying stocks when the overall sector is in a downturn.
Disclosure: The Balance does not provide tax, investment, or financial services and advice. The information is being presented without consideration of the investment objectives, risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal.
A. Gold's baseline, essential quality is its role as the only primary asset that is not someone else's liability. That separates gold from the majority of capital assets which in fact do rely on another's ability to pay, like bonds and bank savings, or the performance of the management, or some other delimiting factor, as is the case with stocks. The first chapter of my book, The ABCs of Gold Investing, ends with this: "No matter what happens in this country, with the dollar, with the stock and bond markets, the gold owner will find a friend in the yellow metal -- something to rely upon when the chips are down. In gold, investors will find a vehicle to protect their wealth. Gold is bedrock."
Local coin and bullion shops may carry various types of bullion bar and coin as well as numismatics and collectibles. Such shops may, however, carry smaller inventories and charge higher premiums compared to online dealers. This makes sense, after all, given the fact the brick and mortar coin shops tend to have higher operating costs compared to online dealers.
Bullion coins sell for a premium over the market price of the metal on the commodities exchanges. Reasons include their comparative small size and the costs associated with manufacture, storage and distribution. The amount of the premium varies depending on the coin's type and weight and the precious metal. The premium also is affected by prevailing demand.