Buying Gold Bullion

    Published: 06-16-2009
    Views: 10,157
    Michael Maroney, Vice President at Monex Deposit Company, explains how to buy gold bullion.

    Michael Maroney: Hi! My name is Michael Maroney. I am the Vice President at Monex Deposit Company. We are discussing the different types of gold and silver you can buy.

    So let's discuss how you purchase gold bullion. Gold bullion has actually been the number one performing asset class for the last decade. It has had an average yield of better than 15% here in the United States.

    Gold has typically provided the investor with an opportunity to hedge against the devaluation of paper currency and it is also a quality investment on certain financial times.

    What we are looking at right now is some severe political and geopolitical rest based on our financial system and gold bullion maybe one of the best ways for an individual to hedge against these problems that sit around the horizon.

    When you purchase gold bullion it is important to understand that bullion bars come in many different sizes. Normally they come in 1 ounce, 10 ounce, kilos which are 32.

    15 ounces, 100 ounce or 400 ounce.

    In order to receive the lowest premium possible you would buy the biggest bar. 1 ounce bars and 10 ounce bars cost you more per ounce so you pay a higher premium to purchase these bars.

    But it may give you the flexibility of selling your portfolio position in piecemeal. It is also essential to understand that when you buy a bar you want to own a bar that is refined or produced by one of the recognized refiners.

    And last but not least, when you sell your bar some dealers will require that this bar is assayed before they allow you to actually lock in a price and what that means is they will take a very small piece to test the purity. It is something that dealers will do to protect themselves against counterfeit bars.

    When you purchase gold bullion it is important to understand that when you do decide to sell it, this will create a taxable event. Dealers are required to send a copy of your name and the proceeds amount from the sale of this bullion bar. That's why it is essential for you to remember that you need to match up the price that you purchased and the price that you sold it at for tax reasons with the IRS.

    These are some of the basic points that need to be understood when buying gold bullion for investment purpose.