In times of economic uncertainty, certain commodities have been considered a safe haven for investors. Throughout history, gold has been perhaps the most important of the aforementioned commodities, providing protection and confidence for buyers looking to hedge their portfolio against inflation or simply own the world’s oldest currency.
If you’re new to the bullion buying process, you might not be sure if gold is right for you; however, purchasing this precious metal is one of the safest investments you can make. Gold is a time-tested commodity that has proven its value throughout history. Additionally, Provident Metals leads the industry in buy-back pricing for bullion. So, if you’re an investor looking to hedge your portfolio and diversify your stock, gold is an excellent choice. If you are looking for collection pieces or enjoy gifting valuable and memorable pieces of history, gold bullion products can offer you the perfect solution.
The spot price of gold is the current market value of one troy ounce of pure gold. Like other commodities, the price of gold will fluctuate as a product of social, political, and economic uncertainties. Historically, gold has increased in value, despite periodic price corrections. Consequently, gold is used by many investors as a secure and conservative strategy for increasing the value of their diversified investment portfolio.
Spot price is constantly changing, as a multitude of factors have the ability to affect the market. Some of these factors are:
Spot price is the same for every precious metals dealer; however, each dealer sells bullion with a premium added to the current spot price. Knowing the premium will help you determine where to get the best value on your gold bullion purchases.
Not only is it important to know spot price when investing in bars and rounds, but because gold has a multitude of other uses, spot price can help determine prices of things like jewelry, electronics, and even visits to your dentist.
Spot price is quoted in many different denominations throughout the world. On Provident Metals’ website, spot price is quoted in US dollars (USD).
Because many factors affect spot price, it is constantly changing. Throughout the years spot price for gold has fluctuated greatly; just ten years ago, you could purchase gold for less than $800/oz. Today, gold spot price is considerably higher. Projections call for continued increases in price due to economic and political factors.
When you shop Provident Metals’ website, your order total will change with the spot price until you arrive at the “Place my Order” page of the checkout process. Once you place your order, you will have two minutes to accept and confirm your purchase at the locked in spot price. If you do not confirm during those two minutes, your total will be subject to any changes in spot price.
Once you confirm your order, your purchase is complete, and your total will not change. You will receive a confirmation email with all your purchase details. If you have any questions about your order, please feel free to call one of our helpful representatives at 800-313-3315.
Provident Metals does not determine spot price; spot price is decided at the COMEX in New York City. It is the universal price used by dealers worldwide; though, each dealer will add their own individually determined premium to the spot price to sell bullion.
In the same way you could not buy a loaf of bread for the collective cost of just the ingredients, you cannot typically purchase gold at spot price. A baker would add a premium to the bread to account for the overhead used when baking; similarly, a dealer must add a premium to spot price in order to cover the cost of being in business and make a profit.
Spot price utilizes the troy ounce (ozt).
For new investors, we have a few suggestions for first time purchases. The following are our most popular gold bullion products:
The COMEX is the Commodities Exchange; it is the marketplace in which precious metals are bought and sold.
The ask price is a function of spot price, and is defined as the minimum price to sell in the market.
The bid price is a function of the spot price, and is the maximum price to complete a transaction in the market.
The premium is the amount added to the spot price by a dealer. It covers the dealer’s overhead and allows the dealer to make a profit. Gold is like any other product sold by a business; without a premium added to the spot price, a business would operate at a loss and could not survive. Online retailers, like Provident Metals, are able to function with lower overhead than a brick and mortar store, and therefore offer bullion at the lowest possible premium.
An avoirdupois ounce (AVDP) weighs slightly less than a troy ounce. I troy oz = 1.097 AVDP oz. The usage of the troy ounce is believed to have begun in a French marketplace named Troyes. Because the marketplace housed dealers from all over the world, a universal unit of measurement was created to trade commodities- the troy ounce.
When browsing bullion products, make sure you are viewing products in 1 troy oz weights; it is not uncommon for dealers to try to confuse buyers by using different units of measurement to appear to have low premiums.
1 troy ounce = 31.10 grams
1 kilogram = 32.15 troy ounces
The gold-to-silver ratio illustrates the relationship between gold and silver and indicates the number of silver ounces required to purchase one ounce of gold. To determine the gold-to-silver ratio at any given point, simply divide the current spot price of gold by the current spot price of silver.
If gold spot price is $1342.08 and silver spot price is $19.82, then:
$1342.08 âž— $19.82 = 67.7.
If you round to the closest whole number, you find the gold-to-silver ratio is 68.
Knowing the gold-to-silver ratio helps you determine the best time to buy a commodity. When the ratio is low, gold is typically a good precious metal to buy and silver is good to sell. When the ratio is high, gold will typically offer a great return, while silver is best to buy.
The best time to buy gold is when you can afford to purchase it without too much risk; this may be different times for different people.
Throughout the years, gold spot price has increased substantially. Current economists predict a continued rise in pricing for this precious metal, as well. Knowing the gold-to-silver ratio is important, and diversifying your portfolio is essential. Owning gold is a smart way to hedge against inflation, and watching the market to see what changes may be taking place can help you make wise decisions when investing to maximize your return and minimize risk.
Price fixing is gold pricing controlled by the five companies that make up the London Bullion Market Association (LMBA). Twice daily, the LMBA adjusts the price of gold to match current supply and demand circumstances. The price is set in US dollars and available on LMBA’s website (www.lmba.org).
Price manipulation is the illegal tampering of gold prices by non-sovereign banks or other vested parties to create a market favorable to private interests. Unfortunately, it does occur at times, though those who participate in price manipulation do face prosecution when discovered.
A sovereign mint is owned and operated by the government and offers bullion that functions as guaranteed, legal tender with a face value. A private mint is run by a privately owned business and offers bullion rounds and bars that do not function as currency.
Purchasing privately minted bullion has several benefits versus purchasing sovereign minted bullion. First, private mints have less overhead and are not guaranteed as legal tender, making the premium on rounds and bars lower. Additionally, private mints typically create themed bullion for collectors of a wide variety of subjects from history to wildlife to comic books and superheroes.
When you purchase sovereign bullion, you have legal tender, guaranteed by the government by which it was issued. Premium may be higher, but your coins will always be worth their face value, at minimum, which allows you peace of mind. Because sovereign bullion is government issued, it is widely accepted throughout the world. Additionally, the government guarantees the weight and purity of the coin.
The face value of sovereign bullion guarantees the minimum worth as the noted face value, but it does not impede the oftentimes much greater intrinsic value of the coin which it gains from the gold with which it is created. A 1 oz coin with a $50 face value is guaranteed to be worth at least $50, but the 1 oz of gold it is composed of makes it much more valuable.
Bullion coins are most common investment of gold investors because they have a straightforward value; they are guaranteed at their face value (should they have one), and have a specific value based on the spot price of their metal of composition. They are ideal for investing due to their simple pricing and stackability.
Numismatic coins are marketed to collectors. They are coins whose value is derived primarily from the coin’s rarity and collectibility. Importance is placed less on the amount of gold with which is it composed and more on the history and significance of the coin itself.
Typically, the most popular Provident products are those with a low premium or sovereign minted coins which can function as currency. Provident frequently offers bullion at prices just slightly above spot price so you can build your investment, affordably.
In addition to products priced with ultra low premiums, Provident Metals offers a wide variety of uniquely designed rounds and bars to add value and beauty to your investment portfolio.
When investing in any commodity, make sure you are first aware of any potential risks. Investing can be a very fruitful experience if you first research the market. Gold is a wise investment due to its use in currency and its history of retaining its value. There are different ways you can invest in the yellow metal:
A precious metals IRA is a self-directed Individual Retirement Account which is held by a custodian and contains your gold (and other precious metal) investments. Many investors choose to diversify their portfolios with a precious metals IRA as a way to hedge against inflation.
Of course! Provident Metals has been a trusted provider of gold bullion online for several years, and we have thousands of reviews from happy customers. We ship discreetly to ensure your package is safe. If you have any questions about the purchasing process, feel free to contact one of our helpful representatives at 800-313-3315.
You have a variety of ways to cash in on your gold investment, depending on the type of ownership you have. If you have physical bullion, you have a few options:
Because gold is the oldest and most widely accepted form of currency worldwide, you can rest assured your investment will always be highly valuable and easily liquidated.