There’s a tendency to think it is difficult to earn money on the purchase and sale of gold because the investment in precious metals requires significant investments. However, in fact, there are a large number of opportunities for a profitable investment on a small budget. The purchase of gold provides an opportunity to save and increase savings. Over the past two decades, the price on gold is constantly changing (2008-2012 from $ 833 to $ 1,675 per ounce), but, despite minor falls, stability and growth are clearly visible. All you need is to choose the way to invest, understand the trends and place bets correctly.
Attractiveness of investment in gold
Gold is actively used for various purposes – manufacturing jewelry, bullion coins and medals, ingots, in industry, microelectronics (computers, robots, wires and TV`s), for constructing satellites and military equipment, for expanding the country’s gold fund. At the same time, its reserves are limited, and there’s no worthy alternative. Because of such inflation, the prices on gold will constantly grow, and investments in metal will be one of the profitable financial options.
Ways to earn money on gold
Prices for gold vary significantly. The cost depends on the form in presented precious metal. It can be jewelry, bullion, bullion or rare coins. Each of these categories has its own positive and negative sides, based on which it is possible to decide which option is better for investing in gold and making a profit.
Do you know? The government keeps gold in reserve in case of war, because during wartime, gold is what will serve as an international currency for the purchase of military equipment. This is how the US received most of the world’s gold at the end of World War II.
Investments in coins
Bullion and commemorative coins
Gold coins issued by banks by weight can become a profitable acquisition. Using them as an example, you can understand how to make money by selling gold. For starters, it is enough to have a small capital and understanding which items are in demand. This will determine the initial price and subsequent profit.
Bullion coins are minted in large quantities, so they don’t have a numismatic value. The cost is determined by the price of a gram of gold (the greater the weight of the coin, the more you can earn on sale). Commemorative coins (produced in a limited circulation for a specific event) are more valuable items. Their value is determined by the weight, circulation, year and quality of coinage. If the commemorative item is minted as Proof, then its cost increases significantly.
Do you know?
The original design of the American Golden Eagle coin with the image of the statue of Liberty was chosen by President Theodore Roosevelt. The reverse depicts the image of Lady Liberty, walking to the viewer. “Many collectors believe that this design is the best in the history of American coinage,” said Philippe N.Dill (the president of the US Federal Reserve System and former director of the United States Mint).
Benefits of buying and selling gold coins:
- easy to buy and sell (in any branch of a bank);
- handed over to you;
- aren`t taxed;
- can be transported to other countries.
Do you know?
When the design was sent to the Minister of Finance James A. Baker for the final approval, he returned it back to the mint with an instruction to reduce the weight of the coin. The engravers reduced the size of the arms and legs of Lady Liberty, which caused controversy among numismatic artists and many collectors. However, politics prevailed over art.
It is important to understand that investing in coins and earning money on them will be a long-term process. The cost of a monetary unit of precious metal will be sizable only in 5-6 years. For the investment copy does not lose its price, it is necessary to store it carefully or to buy coins in slabs. A special container will help you to protect them from external damage.
Rare gold coins
A significant bonus can be obtained by buying and selling ancient gold coins. The precious metal is growing in price, so is the demand for rare items. In order not to run up to counterfeit and to understand which coins are in price, a little theory is needed. World’s famous coins can be studied in catalogs of gold and silver coins, where all parameters (weight, year, circulation) and current price are indicated. The rarest and most valuable items can be bought at a modest price, and later sold at 2 or 3 times bigger price.
Investments in other gold items
The easiest investment in gold is the purchase of jewelry. However, this method is not always profitable, because the value of the product consists not only of the price of gold but also the work of the master, the presence of precious stones and a tax rate. If there is a need to sell a jewelry item, then the price for it will drop by 30%. The pawnshops don’t look at the brand and other aspects that affect the value of the gold item (take at the price of scrap).
Do you know? The consumption of gold is about 6,000 tons, production – 3,000 tons. According to the current estimates of the World Gold Council, it is assumed that about 187,200 tons have already been mined, two-thirds of which were mined during the last 70 years. If you add all the gold mined together and place it in a cube, the length of its faces will be 21 meters on each side. As for the gold that remains in the ground – its weight is about 57,000 tons. This figure is not as big as it seems. All the remaining gold can be placed in a cube with the faces of 6 meters.
A higher profit from investing in gold can be earned by becoming a partner of the Gold Affiliate program. The service includes the sale of jewelry items from well-known manufacturers through its website. Under such conditions, you can earn up to 30% of the cost of the goods. This method is completely legal, but requires ownership of a website and ability to attract customers.
One of the easiest ways of investing in gold is to purchase bullion with a fineness of 999. The purchase does not guarantee an early profit, but ensures the protection and safety of cash from depreciation. You can do this in any bank, simply by contacting a branch, holding a license for the sale of precious metals with your passport. It worth noting, that each bank has its own rate, which can differ from the rates on the world financial markets.
Investing and storing gold bullions are not always profitable. When buying, you will have to pay 18% VAT (not in all countries). In order to pay off and earn money on the sale of gold, you will have to wait until the price rise by 30-35%. All this time the precious metal has to be stored in the bank, otherwise small scratches and chips will significantly reduce the price (up to 30% of the original). Before buying bullion at the bank branch, they request an examination. This service is paid for by the client and it is 10% of the transaction.
Depersonalized metal accounts (DMA)are slightly more profitable. The service is similar to a deposit, but the bank doesn’t store the money on the account, but virtual gold. The advantage of this method is the absence of a purchase tax (18%), no storage costs, free opening and closing of the deposit. It is opened at the current rate of gold and is closed at any time also at the current rate. Due to this, you can get a good return with minimal investments, but you will have to constantly monitor the exchanges.
Disadvantages of DMA:
- there is no insurance against bank liquidation;
- commission for all operations (opening and closing – 1%, income tax of earnings – 13%);
- high spread between buying and selling;
- limited number of banks with good offers.
Do you know? The Fort Knox is an army post in southern Kentucky, as well as a repository of gold reserves. About 4,600 metric tons of gold is stored on its territory for the total price of about $ 200 billion. IT is about 2.5% of all gold that was ever mined
And yet, if you want to earn on the purchase and sale of gold, the safest and easiest option will be the DMA.