Buying and Investing In Gold Coins
Gold coins are a common way of investing in, and owning gold. Bullion coins are priced according to their fine weight, plus a small premium based on supply and demand. Numismatic gold coins are priced mainly by supply and demand and based on rarity and condition.
The Krugerrand is the most widely-held gold bullion coin, with 46,000,000 troy ounces (1,400 tonnes) in circulation. Other common gold bullion coins include the Australian Gold Nugget (Kangaroo), Austrian Philharmoniker (Philharmonic), Austrian 100 Corona, Canadian Gold Maple Leaf, Chinese Gold Panda, Malaysian Kijang Emas, French Napoleon or Louis d'Or, Mexican Gold 50 Peso, British Sovereign, American Gold Eagle, and American Buffalo.
Coins may be purchased from a variety of dealers both large and small. Make sure you do your due diligence when buying gold. Thoroughly check dealers before your purchase. Fake gold coins are not uncommon, and are usually made of gold-plated lead.
Of all the precious metals, gold is the most popular as an investment. Investors generally buy gold as a hedge against economic, political, or social fiat currency crises. The gold market is subject to speculation as are other markets, especially through the use of futures contracts and derivatives.
The history of the gold standard, the role of gold reserves in central banking, gold's low correlation with other commodity prices, and its pricing in relation to fiat currencies during the Late-2000s financial crisis, suggest that gold behaves more like a currency than a commodity.
Today, like most commodities, the price of gold is driven by supply and demand as well as speculation. However unlike most other commodities, saving and disposal plays a larger role in affecting its price than its consumption. Most of the gold ever mined still exists in accessible form, such as bullion and mass-produced jewelry, with little value over its fine weight — and is thus potentially able to come back onto the gold market for the right price. At the end of 2006, it was estimated that all the gold ever mined totalled 158,000 tonnes
Given the huge quantity of gold stored above-ground compared to the annual production, the price of gold is mainly affected by changes in demand rather than changes in annual production. According to the World Gold Council, annual mine production of gold over the last few years has been close to 2,500 tonnes. About 2,000 tonnes goes into jewellery or industrial/dental production, and around 500 tonnes goes to retail investors and exchange traded gold funds.
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Read more about the history of Gold as an Investment on Wiki Pedia.