FAQ about Precious Metal Investing
How much gold is produced (mined) annually?
Gold production has increased marginally year by year. Whereas the worldwide output was 2,861 tonnes in 2012, it increased to 2,920 tonnes in 2013 and might have surpassed 3,000 tonnes for the very first time in history in 2014 according to the GFMS. The list of the world's eight major gold producing countries is led by China by a wide margin with Australia in 2nd and the USA in 3rd place. Russia, South Africa, Peru, Canada and Indonesia follow behind. The production from these eight countries is declining though and more than a hundred smaller producers contribute to the world's annual output.
What is the trend for the coming years/decades?
Many experts believe that the annual worldwide gold production will begin to dwindle after reaching a new production record in 2014. Some reasons are outlined in this article. A lower annual gold production will inevitably lead to higher gold prices over time. Investors who purchase their gold now will benefit from lower purchase prices over those who wait for the gold price to rise.
Are there differences in the gold price from one country to another?
Since gold is traded as a commodity worldwide, the gold spot price is basically the same throughout the world. However, the premiums that are charged on top of the spot price can vary significantly from one country and dealer to another.
Why should I buy gold in the form of bullion coins and bars if I can buy much more beautiful gold gifts and jewelry?
In some countries like India, a lot of the gold that is sold to consumers is sold in the form of gold jewelry and various gold gifts. You would have to pay much higher premiums for such items than for bullion products. Furthermore, the gold purity of such gold gifts/jewelry is almost always far below bullion standards (at least 90%). These items are also not as liquid (easy to sell) as bullion products.
Which institutions produce gold bars, rounds and coins out of the mined gold?
Both government mints and private mints throughout the world produce gold bars, rounds and coins. The products of certain government mints and private mints are especially popular with investors and collectors due to their respectability as well as the high quality and value of their minted products. Only these respectable institutions and their products are featured on these pages.
What is the minimum purity for coins/bars out of gold, silver, platinum and palladium to be considered bullion?
It is 91.67% (22 karat) for gold bullion coins and 99.99% for gold bars. For silver bullion it is 99.9% and for both platinum and palladium 99.95%. Some bullion products considerably exceed these minimum standards and reach purities of up to 99.999%.
Which government mints produce gold bullion coins/bars that are popular with investors?
The production of the country’s circulating coinage is a government mint's main task. However, many government mints also produce precious metal bullion coins for investment purposes. Most popular bullion coin series already started decades ago but new bullion coins like the Queen's Beasts coins are also occasionally introduced to the market. It must be noted that only government mints can legally produce coins. Some government mints also produce bullion bars such as the Royal Canadian Mint and the Perth Mint. Our pages only feature the world's most respected government mints.
Do some government mints also issue numismatic precious metal coins that meet bullion purity standards?
Yes, some government mints that are famous for their bullion coins like Australia's Perth Mint also issue numismatic precious metal coins in limited mintages. Examples for such coins are gilded coins, colored coins, holographic/hologram coins and even diamond-studded coins. Numismatic bullion coins such as these will cost you a considerable premium above the precious metal spot price due to their collectibility. Some smaller government mints also issue numismatic precious metal coins (some of which meet bullion purity standards) like for example the Mint of Finland or the Federal Mint Swissmint. However, gold coins are not only issued by developed countries but also by developing countries. The Philippines have a long history of issuing gold coins for example.
Adding a special privy mark and/or mint mark to a precious metal bullion coin is the easiest and cheapest way for a mint to enhance the coin's appeal to collectors and thereby increase its sales premium. Another way to attract collectors is to make the issued coins a part of a larger continuing coin series. Many mints around the world issue Chinese Lunar coins for example. The more severely the mintage of such coins is capped, the higher will generally be their price. That's why these coins are primarily bought by collectors instead of investors.
What can I do as a coin collector if I like the design of a certain gold bullion coin that I however can't afford to buy?
If you just buy coins as a hobby and not for the purpose of investment, you might consider buying a replica of the gold bullion coin you desire. Replica coins are legal as long as they are marked with the word COPY on the coin itself. Some coins may have their entire design copyrighted (so it is illegal to make replicas of these coins) but that is very rare.
Which private mints produce gold bullion rounds/bars that are popular with investors?
Private mints are corporations that operate independently and produce precious metal bullion bars and rounds for investors. Private mints aren't authorized to produce any legal tender coinage. Several dozen private mints exist in the United States alone, probably hundreds all over the world. However, only one or two handful of private mints have achieved world-wide fame and recognition. Only products from these highly-respected private mints are recommended in the pages of this website.
What's the difference between coins, rounds, medals (medallions) and bars?
The differences between coins, rounds and medals (medallions) can create some confusion among inexperienced precious metal investors. Coins have a face value and are legal tender in the country that issues them. Only government mints can issue coins. Bullion Coins are made of precious metal. Their market value depends on the amount and purity of precious metal they contain and far exceeds their face value. Some bullion coins can also have an added numismatic value. That is true for limited edition coins or coins with certain aberrations or coins from low mintage years. Some bullion coin series change their reverse design every year which makes them interesting for numismatists as well.
Historic coins can also have a far higher value than can be attributed to their metal content alone. That is true for coins that have been certified by a coin grading company as well as any historic coins that are nowadays considered to be very rare.
Rounds are produced by private mints. They don't have a face value and aren't legal tender but may otherwise look like coins.
Precious metal medallions/medals are issued to commemorate certain events/people in an official way. They are not legal tender and don’t have a face value and even their precious metal purity and weight is usually not engraved on them. Some gold medals like the Olympic gold medals are actually gold-plated silver medals.
Precious metal bars are produced by many private mints and a few government mints. They are intended for investors who want to buy larger amounts of bullion for lower premiums over the spot metal price. Both private and government mints produce bars out of gold, silver, platinum and palladium. Not all government mints produce precious metal bars though.
Are bullion products protected from counterfeiting just like paper currency?
Counterfeiting is a growing problem in the precious metal industry. Most mints employ some kind of anti-counterfeiting measures these days such as verifiable serial numbers, privy marks that are only visible under magnification, radial lines (which are hard to counterfeit) and various other ways. The best protection you have is to only buy from trustworthy dealers (and not on ebay).
Which criteria are important to consider when choosing an online gold dealer?
Potential buyers should consider whether the dealer charges commissions or service charges, offers quantity discounts and/or discounts for certain kinds of payment, has minimum and/or maximum order amounts, offers free shipping etc. All of these and more factors are listed and used for comparison on the pages that introduce the bullion dealers.
What options exist for storing the purchased gold bullion coins/bars/rounds?
Most customers choose to have their purchased bullion delivered to their home. However, many online bullion dealers cooperate with storage companies that will store precious metals securely for a fee. Many dealers give their customers the option to have their purchased bullion shipped directly to the storage provider, often free of shipping charges.
Why is it beneficial to invest in gold?
Investing in gold has several advantages compared to other forms of investment. For one, gold can never be worthless. It has an intrinsic value unlike paper currencies or electronic currencies like Bitcoin. In fact, gold historically has maintained its relative purchasing power even in times of inflation. Another benefit is that gold is in high demand and can be traded worldwide. One ounce of gold has the same intrinsic value no matter where you go. Gold prices generally move independently from stock and bond prices. Therefore, investing in gold is a great way to balance and diversify your portfolio. Furthermore, gold can be easily passed on from one generation to the next.
How much gold should I buy?
Many financial experts recommend to invest between 5 % and 10 % of your total investment budget in precious metal bullion. Many customers in India, China, Switzerland and other countries typically invest a much larger share than that. How much do you trust the central bank in your country to keep inflation in check? Countries that drive up inflation through the printing of more money will see many of their citizens seek refuge in safe physical assets such as gold.
What are some of the pitfalls when selecting an online gold dealer?
You should only buy from retailers that have a good reputation, such as the ones listed on this website. Some dealers add commissions or other hidden charges at checkout. Another potential pitfall is that some dealers sell products on their website that they don't actually have in stock.
How should I handle/store the precious metal bullion I buy online?
Most customers choose to have their purchased bullion delivered to their home. When handling/storing coins or other collectible precious metal bullion at home, it is important to use protective storage supplies that prevent scratches, discolorations and other potential problems. Investors who buy larger amounts of precious metal bullion should consider having it stored at a secure storage facility. Many online gold dealers cooperate with one or more such storage providers.
What determines the gold price that customers have to pay?
The price you'll have to pay for your precious metal bullion products consists of the spot price of the metal plus a premium. The spot price is the current market price of the metal. It changes frequently throughout the day since gold is constantly traded all around the world (just like stocks and bonds). Premium is the additional price you pay above the spot price of the metal for fabrication, distribution and so on.
Should I buy physical gold or paper gold?
Some paper forms of gold can be exchanged to physical gold whereas others can't. In general, it is a bit cheaper to buy paper forms of gold than the physical metal. However, serious risks are associated with paper gold investments. Companies that offer paper gold investments usually have difficult conditions attached to the conversion of the investor's paper gold to real physical gold. Some companies might not even possess physical gold bullion. The paper gold that they sell to investors is 'backed' by more paper gold that the company owns. For these reasons, Buy-Gold.Link advises its readers to stay away from paper gold investments and to invest in real gold bullion coins, rounds and bars.