How to Buy Gold Eagles, Krugerrands and Bars

Entering the precious metals marketplace for the first time can be confusing for an individual investor. Commons questions like, "What kind of gold should I buy?" and "What if the gold prices go down like they did in the late 1990s?" can be answered easily once one learns how to buy gold and gold bullion.

Gold has been used on the earth for thousand of years, and is well-known as a preserver of wealth, hedge against inflation, and shield against failing governments and their fiat currencies.

Today, an estimated 5.5 billion ounces of gold exists above ground, and most of this has been moving around for the last 3,000 years. Unlike other precious metals, gold is not linked closely to industrial production, putting it in a metals category all its own.

Growing Gold Demand

Currently, worldwide demand for gold bullion is growing, especially in China and India where savings rates are high and discretionary spending is growing. In 2005, the Chinese government announced their intent to increase gold holdings more than fourfold.

As industrialized countries' governments pump bailout monies into shaky economies, nervous investors are looking to gold as a monetary higher ground. This kind of demand always signals a run-up in prices. Some economists say gold will triple in value over the next several years: all the more reason to start buying gold now!

Many investors choose to buy gold bullion coins, specifically American Gold Eagles, Canadian Maple Leafs, and South African Krugerrands. Being the most prominent coins on the market, these three reveal their gold values (in troy ounces) on the coin, making them ideal sales and trade pieces worldwide. These coins can be purchased in 1 oz, ½ oz, ¼ oz, and 1/10 oz denominations. The Maple Leaf is pure 24 karat gold, while both Gold Eagle and Krugerrand are 22 karat gold and alloyed with metal to improve durability.

Investors often add gold bars to their investment mix once they get comfortable dealing with precious metals. Buying a gold bar means first choosing among a cast or mint bar, according to individual needs.

Cast Gold Bars

Cast gold bars are produced by pouring molten gold into a ingot mould with the appropriate dimensions. Once cooled, the melted gold hardens into blocks of solid gold ingot bars.

Mint Bars 

To create minted gold bars, a cast gold bar is first rolled to a uniform thickness and then a die is used to cut it to the required dimensions.

New to the gold market is ChipGold, which comes in 1-to 20-gram sealed packages and equivalent to the size of a credit card.

Gold bars and gold bullion coins are commonly purchased online from dealers, at live and online auctions, from local coin shops and directly from a mint. Any method of purchase is fairly simple as long as a buyer understands what he or she is buying and deals with a reputable entity.

Some bullion dealers and mints typically accept money orders, cashiers checks, and personal checks as methods of payment, however, others will only accept bank wires. Most will not accept credit card payments.

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