Buy gold, they say! It might be easy to find a bullion dealer Brisbane but the question that plagues most people is that whether they can afford to buy bullion go begin with. What is even more exasperating is that what you end up paying might not be the same as the current spot price of gold. That’s because people tend to think that the spot price is like a share price. The truth is what we know as the spot price of gold is the value of raw gold before it is refined and turned to a gold bar, gold coin or a gold round.
To explain why gold bullion costs more than spot price think of it this way: Imagine you went to purchase gold mining equipment and decided to dig in your backyard for gold because someone told you that there was once gold in the area you live in. You could be lucky like thousands of other people who stumble upon nuggets everyday. You will have to turn your gold into something recognizable like a coin or a bar. That requires it’s own equipment and it will take time to get the impurities out. Then you would have to stamp it, you may have to visit a mint go have your refined bullion the bar stamped. Most refineries will charge you more for this service. You will also find that mints are reluctant to put their stamp on gold they did not melt and refine. The gold product still has to go to an assayer to verify it’s purity. All those steps cost money. If you go through this scenario, you will understand why a few percentages over spot price that is charged by a gold bullion dealer Brisbane isn’t unreasonable.
Despite all that, surely there is a cheaper way to buy gold? The answer to that is: Yes there is.
Gold bullion comes either as coins, bars or rounds. The price of a gold bar or coin over spot price as the premium. So, a gold bullion coin might be priced at 5% premium over spot or some other percentage.
A 1-oz. Bullion coin will be more expensive than an ounce of a gold bullion bar. Part of the reason is the fact that bullion coins carry a face value assigned by a government. A 1-oz. American Gold Eagle coin carries a $50 face value. It doesn’t mean that is what the coin is worth, just that in a worst case economic scenario, the government can buy your coin for the face value it carries. That isn’t likely to happen in the near future as the spot price of gold is around $1,800 an ounce. However, because of the high premium that such a coin carries, when you buy an American Eagle gold bullion coin, you are also paying for the pedigree. The same can be said for Canadian Maple leaf gold coins and other bullion coins produced by government mints. The premium for gold bullion coins is usually 3 to 5% over spot.
Gold rounds are usually produced by private mints. They do not have the same status as gold bullion coins minted by government mints. Gold rounds are just that, round. They do not have any intricate designs on their faces or carry a face value. The value they carry has to do with the gold content or the quality of gold. Private mints don’t sell a lot of gold rounds because they aren’t so popular. Gold rounds are usually priced at 2 to 3 percent over the spot price.
Gold bullion bars are cheaper than coins or rounds. They are traded more often than gold coins. The most commonly traded bullion bars weigh about 400oz. Gold bars are available in a variety of sizes. There are more different sized gold bars than there are gold coins and gold rounds. There are also a lot more private mints that make gold bars than there are mints making gold coins and rounds. There is a lot of competition amongst gold bar manufacturers and dealers. This affects the pricing as well. Gold bullion dealers Brisbane might offer low prices on bullion bars when there are more bars circulating an a higher interest from customers wanting to invest in gold. The only important thing about gold bars is the quality, there are no intricate designs stamped on them except maybe the refiner’s stamp and the fineness stamp. Gold bullion bars sell for 1 to 2.5 percent over the spot price of gold.
You pay less for gold bullion of you are buying it in bulk. To understand why this is so, consider the person stamping gold bars. If he or she has to stamp 32 x 1oz Gold bars and 1 x 1kg gold bar. It will be quicker to stamp 1 x 1kg gold bar than 32 x 1oz gold bars.
The stamping press uses electricity and the longer it operates the more electricity it will use. Then you have to consider the labor and how long it takes to finish a 1kg bar.
Bottom line, if you are looking for a cheap way to invest in gold bullion gold bars are the cheapest of the three gold bullion.