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What's the Best Type of Gold to Buy?

For those looking to buy gold, it often seems like there’s a barrage of terms and concepts to understand if you want to get the most out of your investment. To an extent this is true – failing to understand some basic gold market concepts could result in you losing out financially.

Luckily the most important concepts are simple and straightforward. To get you started, we’ve put together this guide with a few elementary concepts to provide an insight on the best types of gold to buy and what you need to know to make your decision.

The gold price

The gold price is one of the most important concepts to get your head around. The price of gold changes multiple times a day. This is because the value of gold is not a fixed price, and is determined by a series of ‘over the counter’ transactions, which are overseen by two main organisations, the London Bullion Market Association (LBMA), and COMEX in New York. Transactions with these dealers are high volume and have a real impact on the market as a whole.

The ‘spot price’ of gold, is a constantly updated average figure of the price at which gold is being bought and sold by these dealers. These are seen as an indication of the contemporary value of gold, which is influenced by a broad range of economic factors.

A twice daily price guide is released by the LBMA, called the London gold fix, against which smaller gold dealers price their gold products. This means that gold coin and gold bullion products, like the ones featured on our website, are constantly updated according to this price. Many investors looking to buy and sell gold will therefore pay careful attention to the live spot price, in order to get the best deal for their investment.

Find out more about the gold spot price and the gold fix.

What is gold bullion?

Gold bullion is essentially a catch-all term for any bulk quantity of gold that’s bought and sold for investment purposes. This includes gold bars and gold coins, but tends to exclude gold jewellery, which is not considered investment gold in the same way.

A good way to determine if a gold product is considered ‘bullion’ is to see whether the weight and purity of the gold is inscribed into the product itself, or if it comes with a complimentary certificate. This is a good indicator that the product is being traded primarily for its gold content, rather than for other reasons.

What are the best types of gold to invest in – gold coins or gold bars?

Gold coins and gold bars are separate products which constitute differing forms of bullion. Gold bars are simple, physical blocks of gold, of varying weights, which are designed to store wealth. Smaller variants of gold bars are often referred to as ingots. Gold bars are almost always of a ‘fine gold’ purity of 99.99 per cent.

Commemorative gold coins are produced by coin mints, such as the Royal Mint, or the US Mint; often national organisations that are also responsible for maintaining the physical currency of their respective countries. These coins are often considered physical currency, and hold ‘legal tender’ status.

They are however rarely traded in the same way as a £1 or £2 coin you’d be familiar with is, as the value of their constituent gold content, judged by the spot price, is usually far higher than that of their legal tender value.

The Gold Sovereign, for example, has a face value of £1, but is usually worth between £250 and £300 depending on the contemporary gold spot price.

Gold bars are popular with investors looking to either store their wealth securely or trade against the market fluctuations. Bars tend to carry a lower premium above spot price than coins, making it more straightforward to transact large trades so long as you’re buying and selling reputable brands with a reputable dealer.

The value of gold coins, on the other hand, is a little harder to quantify, since they demand a collector’s premium on top of their raw metal value. They are more popular among coin collectors and long term investors who are keen to take an extra bet on whether or not the value of their coins will increase with historical significance and rarity.

What are the other ways to buy gold?

At The Gold Bullion Company, we sell physical gold bullion. You can choose to have it delivered or come and collect it from our offices. Whichever way you choose, it’s clear that your money is tied to a specific amount of physical gold which you have the option of holding in your hands at any time.

Other people choose to buy gold through financial products. Investment vehicles allow people around the world to trade the precious metal on the commodity markets. In most cases, the physical gold that’s being traded here will never actually change hands, instead pieces of paper and electronic records keep track of ownership.

Products like futures allow investors to make deals that bet on the change in the gold price at a certain point in the future one way or the other. You will never even own the physical gold!

As with most things financial, the gold markets are complex. For us, the best type of gold to buy is physical gold bullion. The precious metal has been loved for centuries as a safe haven in which to grow and store wealth and physical bullion best reflects these qualities today.

Holding gold as a physical commodity is in many ways fundamental to its appeal. Gold bars don’t rely upon the physical or economic security of another person or organisation to protect their value. It’s all about your own personal physical gold investment.

How to buy gold bullion

Though commemorative coins often demand a higher premium, all gold products will have some premium on top of the live spot price. This is to cover the additional costs of storing, testing and minting. It is therefore important to buy gold from the most competitive and trustworthy gold dealers, in order to ensure that you gain the maximum possible return on your investment.

All gold products on our website are automatically updated in line with the gold price, meaning you can be sure that you are always paying the best possible purchase price. Have a look at our range of gold coins or gold bars, if you want to find out more about our range of investment opportunities.