Investing in Gold

InvestingSince time immemorial, Gold has been viewed as a global currency and a symbol of wealth and affluence. In recent years, and especially during times of economic volatility, Gold has become the esteemed acropolis of wealth preservation. It is commonly used as a vehicle through which investors’ hedge against economic, political, social and fiat currency crises.

Unlike other types of currencies, Gold has remained relatively stable for the past century. Its appreciating value is not coupled to management and earnings reports and is unlikely to have sudden steep dips. It is able to counteract the negative effects of inflation, that other currencies are subjected to when governments inject liquidity into their economies, and will always retain its intrinsic value.

Whether it is diversification, risk mitigation, or insurance against geopolitical strife and economic uncertainty, Gold will provide significant benefits to any portfolio or investor.

Getting started

Managing an Investment portfolio can be cumbersome activity including complicated documents and calculations. With a plethora of gold investment instruments available, ranging from Exchange traded instruments such as ETF’s and ETN’s, through to derivatives, spreads and extremely volatile shares in mining companies, Bullion remains the most traditional and secure means of investing in gold.

Gold Bullion, consisting of bars and coins, are priced according to their fine weight plus a small premium based on supply and demand, whilst numismatic and rare coins are priced primarily by supply and demand and are influenced significantly by condition and historical relevance. Bullion value fluctuates with the market value of its precious metal content.

Bars are available in numerous sizes including 400 Troy ounces (12 kg), 32 oz (1 kg), 10 oz, 100g, and 10g. Whilst bars carry lower premiums than coins, they are subjected to reduced mobility and often greater risk in terms of forgery. Be sure to use a reputable dealer and ensure that your purchase conforms to a governance structure commonly known as the Good Delivery specification.

Gold bullion coins are a far more affordable option than gold bars. South Africa was the first country to strike a bullion coin in the form of the world-renowned Krugerrand. The Krugerrand is the most widely-held gold bullion coin with approximately 46 000 000 troy ounces in circulation. Coins are generally available in 1 oz, Half oz, Quarter oz and Tenth oz – with the smaller denominations carrying higher premiums.

Both bars and coins can easily be traded at major banks and dealers. At Select a Coin, you can be rest-assured that we’ll provide the best service and the lowest rates.

Rare and Proof Coins

Krugerrands vs. Rare Coins

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It is a great misconception that rare coins are for collectors who wish to spend their nights with a magnifying glass, ogling at the artistic value, and scrutinising the flaws of the coins in their collection. Collecting and trading rare coins has become one of the best gold investment vehicles. Whilst rare coins are difficult to find, and are subjected to numerous influencing factors such as age, rarity, historical significance and quality, Proof Coins have been designed to bridge the gap between rare and bullion coins. They contain the precious metal, providing its base value, and are supplemented by rarity (as a result of limited mintage), superior quality, historical relevance and artistic appeal.

Minted primarily for collection purposes, Proof Coins are struck with aim of creating a limited number of coins that are free of chips, scratches and blemishes – flawless. They are typically encapsulated, protecting them from future damage, fingerprints and scratches, and sold in limited edition sets or individual coins. These highly sought after coins are initially sold at a small premium, and often appreciate very rapidly once it goes out of production (SA Mint – typically 2 years or once the maximum mintage has been reached). Have a look at Select a Coin’s Growth statistics to view the performance of individual coins.

Proof coins are typically sold in the following formats:

  • Launch Sets – contains one or more proof coins, some of which has a special mint marks struck on the face of the coin, and typically packaged in a specially designed wooden box;
  • Prestige Sets – contains multiple size proof coins (eg. 1oz, ⅟₁₀th oz and Silver Coin) and typically packaged in a wooden box;
  • Proof Sets - contains multiple sizes proof coins and typically packaged in a leather or velvet box;
  • Figurines – specially carved wooden box containing one or more proof coins; and
  • Single Coins – leather or velvet box containing either the 1 oz, ½ oz, ¼ oz or ⅟₁₀th oz.

Uniquely identifiable Certificates of Authenticity are usually provided with each of the above coins and sets