Widely regarded as one of the lower risk assets to invest in, gold bullion is now far cheaper and easier to invest in than in previous years. With this ease, however, come pitfalls and confusions in value and diversification. Here we look to allay those hurdles by offering a short guide, helping you invest in bullions with greater acumen and success.
Gold bullion is a simple product made and measured into bars, and often bought, sold and traded either in bar form, or as coins (legal tender) or small grains. Trading in precious metal bullion is straightforward; you buy when the price is low and sell when it is high. Most bullion is regarded a long-term investment because it involves astute knowledge of markets over time to accrue a profit. As with many long-term assets, you can consider getting into bullions when the cost is relatively low. Because precious metal bullion moves differently to other commodities, it is useful to hedge against losses. In short, it has its own unique market worth which makes it a useful permanent asset, rather than for a quick short-term profit.
Investment in commodities like bullion is a clever long-term move. Aside from physical ownership of the product (that is, holding the bullion in your own possession or vault), there are many other ways to invest, including grouped funds. Paper bullion — certificate of ownership — are also some of the simplest to own, but the exact definition can and does become murky. Actual physical bullion can be bought in the UK with tax charges. Although there is no stamp duty or VAT to pay on bullion, there may be significant costs if you are personally storing the bullion. It is therefore worth considering trading outside the UK if taxes impinge significantly on profit.
In particular, bullion is a good safe-haven option for when times are tough or when there are significant economic crunches. Because it is a commodity which is rare and with universal appeal, it is highly resistant to inflation. As such, it is a sensible long-term commodity that can be trusted — at the very least — to maintain its value over time. Its stability is part of its attraction because in the event of a global economic collapse, gold will maintain its value. Fluctuations in the value of precious metals often have a correlation with the performance of the economy at large. For instance, if interest is at a low rate, prices of bullion often rise. Take 2005 - 2011, for example, when bullion soared with the economic crisis; investors saw it as a safe-haven following the collapse of banks. As such, most analysts consider bullion a long-term method of preserving wealth.
Selling is the most difficult aspect of bullion to pinpoint and advise. Investments needs to be made with a transparent supplier with a market for buying back bullion. Otherwise, you may be penalised with a reduced value of up to 4% when selling or, even worse, refusal. This is because not all dealers will buy your bullion if it wasn't purchased through them. As such, while many major dealers in bullion will buy commodities that they have not personally sold on, it will mostly be at a lower price than the actual market value. Perhaps one of the simplest current suppliers is BullionRock, which offers a simple process that takes the headaches out of trading. If looking for efficiency, the stock market is the easiest way to trade; be sure to choose physically backed exchange-traded funds rather than synthetic options. In sum, consistency is often required when buying and selling bullion, a process made easy if you choose a transparent supplier.
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