If you are interested in investing and you plan on buying silver or gold bullion what forms should you invest in? There are many choices available, and your decision could impact the return you get and the expenses that you incur along the way. The varying forms that can be chosen will involve varying mark ups and commission expenses and they include:
Dust Or Powder- Dust and powder can be found for many types of metals, and a number of websites offer authentic gold dust for sale. As an investment this form is not really ideal for a number of reasons, and the percentage charged in commissions are not the lowest possible. This must be stored in a container of some type, and if spilled it may be impossible to recover all of the precious metal in some cases.
Rounds- Rounds are similar to coins, but they do not have any currency value and they can not be used as money. It is possible to find these with a blank surface or with an imprinted or engraved design, and this could impact the final cost. These are usually found in boxes with a specific count or in certain weights, and they are priced less than some forms but more than others.
Ingots- Ingots may also be called nuggets, and these are usually not thought of as an excellent investment choice for several reasons. The weight and purity can vary considerably from one product to the next and there are no standardized aspects that can be compared.
Coins- On average coins are considered to be the most expensive way to buy gold or silver, and the premium that is charged can be high. Some of these items may be valued with a numismatic basis and they can run into the hundreds of thousands of dollars or even more. A few have sold at auction for millions. Most investors avoid these because of all the additional variables and the much higher expenses that may be required.
Bars- Bars of bullion are usually considered the best bet for investing, and these are often the least expensive choice that you can make. You will find these in sizes that may be less to a gram up to 100 ounces or more, and the quantity or weight that you order can change the price that you pay. Larger items and bulk quantities may receive a discount, making the lowest cost option even more affordable as a result.
The value of the dollar affects the price of precious metals in a variety of ways. The currency of the United States has been the main driver for the world economy for many years. This appears to be changing. The devalued dollar coupled with the growth of countries such as India and China is changing the face of the international currency market. The metals market including is priced in US dollars making the corresponding price of the metals subject to the fluctuations of the exchange rate of the dollar. However, the weakened US currency is having less of an effect on the metals market and specifically the precious metals market as the power base of the world economy starts to shift.
The purchasing power of the dollar has been on a decline for years, but a devalued dollar combined with the world’s increasing debt level is making investors around the world very nervous. As the dollar value declines the price of these metals increases. The current price of $1733.20 for gold, and $33.29 for silver, are expected to continue to rise. Industry analysts are also expecting a bounce in the price of silver toward the end of 2012.
The dollar has been the reserve currency for the world economy. It has been the only currency in which oil can be traded which is one of the reasons the United States has been able to accumulate a debt of $14 trillion. This favored status for the US dollar appears to be coming to an end. In 2010, Russia and China switched to each other’s currencies in bilateral trade agreements which included oil purchases. “If people and creditors start to lose faith in the dollar and other hard currencies, then a dollar crisis could unfold and that would likely impact all markets,” stated Robert B. Zoellick, President of the World Bank. This would include the precious metals market.
The effect of the weakening currency is also having an effect on the purchase of gold reserves by countries such as Russia and China. Russian Central Bank has been converting significant amounts of paper currency into gold. They also purchased more than two thirds of Russia’s gold production in 2010. China has also been upping its purchases of gold, importing 209.7 metric tons of gold in 2010, an increase of 500% over the previous year.
The depreciation in the value of the dollar means prices will continue their rise. Platinum due to its scarcity can be affected in the opposite direction. Platinum tends to rise in value when the economy is good and falls when the economy and the dollar is weak. The long term expectations for the precious metals market is that prices will continue to be affected by the value of the US dollar in foreign exchange markets. However, the devalued dollar will not be the only factor to impact these rates. The prices and demand for gold, silver, platinum, etc. will continue to be impacted by the inflation rate, unemployment rate, political unrest, and government monetary policies around the world.