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The Beginners' Guide
We know your hard-earned cash means a lot and you want to be sure you are investing in the right product. Well you have come to the right place!
Investing in precious metals is not as scary as it seems. It’s as simple as buying a painting and selling it down the line.
Do not get overwhelmed with what we are about to say. It may seem like a lot to take in if you are a first-time buyer but don’t you worry, we have created a simple sheet to provide you with the essential points you need to know when purchasing bullion or numismatic items for the first time. We will go over the following steps:
- Should you invest in gold, silver, platinum or palladium?
- Bullion bars, bullion coins, rare coins, world coins or modern issues?
- How much should you invest?
- Storing your item(s)
- Selling your item(s)
- Dos and Don'ts
... Let’s begin!
#1 - Should you invest in gold, silver, palladium or platinum?
Although this is entirely up to you, we do have a few pointers.
Gold is the more common precious metal to invest in, it is easy to store, appealing to the eye and well, who doesn’t love gold! Jewelry is one of the primary uses for gold. as well as in electronics. Gold is in constant demand.
Silver is also a great investment option; however, it is less expensive than gold, therefore 1kg of silver is of bigger volume than 1kg of gold, which may be an issue if you have a lot of money to invest – see picture below. Other than that, it is said to be hugely undervalued. Silver's number one usage is in electronics, consumer appliances, automobiles and so on! Like gold, silver is in constant demand.
As you can see by the image below, it would take approximately 73 x 1 kg silver bars to reach the same price as a 1 kg gold bar, wow!
Palladium is not a very common type of precious metal, although demand for it is on the rise. Palladium belongs to the Platinum group - 6 noble metallic elements which include rhodium, platinum and a few other metals we've never heard of. Palladium can be found in electronics, dental and jewelry and is highly resistant to wear and tarnish.
Platinum is increasingly popular. As mentioned above, it belongs to the Platinum group and has the same usage as Palladium however, it can be manipulated a lot easier than palladium, due to its high durability, which makes it a go-to for jewelry.
Palladium and Platinum look very similar to the naked eye however, platinum is a lot more denser that palladium. If you also haven't noticed, palladium costs a fraction more.
What we are trying to say is that all four precious metals are great investment options. So why not have a little bit of each! It’s important to diversify your portfolio. Hopefully now that you have more of an idea on precious metals, let’s look at the type of product(s) for you.
#2 – Bullion bars, bullion coins, rare coins, world coins or modern issues?
- Bullion bars – Investment & Gifts
Let’s start with bullion bars. These are the most common form of investment. You should know that two types of bullion bars exist: minted bars and cast bars. The bullion market is the most liquid segment of the business as there are more participants, which in turn drives demand. 1 troy oz is the most common type of bullion item traded (a troy ounce is a unit of measure specially used for weighing precious metals, dating back to the Middle Ages!).
Cast bars (see image below) are produced by simply pouring melted gold, silver, platinum or palladium into a cast which is then cooled down and popped out of the mold. Most cast bars typically include the brand of the bar, the weight and the purity. No extra designs, the bar is purely sold for its gold or silver value.
Minted bars (see image below) are gold, silver, palladium or platinum bars that have a particular design stamped onto the front and/or back, that make them slightly more expensive than the cast bars. As you probably figured out, the fabrication and design process requires extra work, this is the only reason they cost a fraction more than cast bars. The purity of the bars remain the same.
So, if you are solely looking to invest money and don’t care too much about the products' appearance, cast bars are for you! If you are looking for a handsome bar for yourself or to give as a present, opt for the minted bars, we have some high quality minted bars just for you and paying a little bit more will definitely be worth it!
- Bullion coins – Investment & Gifts
Now let’s head to bullion coins. These differ from bullion bars as a lot more attention to detail is put in when creating them, they are round, of course, however, "minted" or "cast" coins do not exist, they are simply called bullion coins. The price of these usually varies depending on the amount of detail put into each design. So, you know that if you are paying a little more for a bullion coin over another, extra work has gone into that special little coin to make it extra handsome.
Bullion coins have a face value and typically the year of production, the weight and the purity stamped on them. Bullion coins come both in silver and gold (and platinum) and in an array of designs such as the kangaroo, kookaburra, koala, lunar animals, panda coins and so many more! World coins like these are produced in all different countries and most countries produce their unique bullion coin. Australia is famous for its kangaroo coin, the UK for its Britannia bullion, the US for the Liberty coins or the Buffalo, Canada for the Maple Leaf coin and so on! Bullion coins are ideal if you are looking for something a little extra special. Born in 1980? Why not buy a silver lunar monkey coin! Visiting from overseas? Buy a silver kangaroo coin for a not-so-typical souvenir!
- Rare coins – Gifts, Collectibles & (Investments)
Rare coins are more of a long-term investment as opposed to bullion items, so don’t expect to get quick returns. Rare coins are, however, a unique piece of history you can own. The value of a rare coin is not solely based on the current price of precious metals, it’s valued on its rarity, mintage (the amount of coins that were produced) and its condition (or grade). If you buy a rare coin at the right time, it can be a great investment! If you are looking for something easy, that doesn’t require grading (the condition of the coin – 15 different grades exist!), rare coins are not for you. However, if you are looking for exclusivity, go ahead and get your unique piece!
Item in image: 1920 Sydney Mint Sovereign
- Modern issues – Gifts & Collectables
Modern issues are purely a collector’s item. These are unlikely to bring you great returns however, there’s always an exception to the rule. You may end up purchasing a modern issue item that you manage to sell for more than you bought, you lucky thing! When it comes to modern issues, they are not usually items that appreciate in value, simply because of the mintage; they are legal tender (they have a face value). Again, if very few were produced and demand outweighed supply, then the price of the item would increase. The other reason why you may buy a modern issue is for a keep sake. A set of coins produced the year you, a family member or a friend were born can be something nice to hold onto.
Items in image top left to right: 2015 Proof Coin set, 2008 International Year of Planet Earth coin set and 2010 Blinky Bill Baby coin set.
2015 50th Anniversary of the Royal Australian Mint, 2016 50 Years of Decimal Currency and the 2004 frosted Uncirculated $1 Kangaroo coin.
Now hopefully you have found the right type of product you are considering investing in. The next step is to define how much money you are willing to invest. This has a big impact on the product(s) you will purchase. You should know that the smaller the item, the more fiddly, the more work goes into it. You will not pay the same premium (amount added onto the spot price which covers fabrication and labour costs) for a small 1g bar than for a 1kg bar.
#3: How much should you invest?
As this is probably obvious, we won’t spend a lot of time explaining this. We recommend that you calculate the amount of money you are prepared to set aside for your future and take a certain percentage of that to invest in precious metals. The rest should go into other investments. This allows you to have a diversified portfolio so if one investment is suffering, you are not stuck in a rut.
We do recommend, however, if you are purely looking to invest, to buy in bulk or in larger sizes. You will get more for your money, as the bigger the item, the less of a premium you pay (the price per oz is less). If you think you may need some of the money you are going to invest in a year or two, we recommend to buy smaller bars or coins. By doing so, you can sell a few and keep a few. With kilo bars, you can not cut the bar and sell a slice of it, it doesn't work that way we're afraid! It is something to be mindful of when purchasing any precious metal items. Also, if you purchase a large amount of coins, the price per coin is reduced!
We would love to tell you to invest all your money in precious metals like other dealers but that wouldn’t be very professional of us. We want you to make the best decisions possible when it comes to investing and although we believe precious metals is one of the best investments, don’t put all your eggs in one basket.
#4: Storing your item(s)
You now have some of your own gold and silver bars or coins and you may be wondering where you should keep them ? Under the mattress is a no-no. On the mantelpiece is also a no-no. In a safe place only you have access to is a yes-yes.
Ideally, your items should be stored in a closed safe or deposit box, accessible only by you, away from any heat or sunlight. Silver, especially when unprotected, is affected by exposure and tends to change color or tones. Although this does not affect the item's purity, it may harm its resell value. We recommend to keep the item stored away, in it's original packaging to maintain it's condition.
If you would like us to store your items for you, check out our pricing page here.
#5: Selling your item(s)
Now that all of that is over, you are probably wondering how easy it is to sell your products once you need a little bit of money? Well we are happy to say that it is so easy! Unlike other assets, you are not trapped once you have invested. Although we do recommend keeping your items for at least a year in order to hopefully collect some profit, when you are ready to sell, simply bring your item(s) into Jaggards and we’ll pay you what it’s worth at the current spot rate, cash or bank transfer.
Dos and Don'ts
X Do not take coins out of their plastic capsules - any fingerprints or particles that accumulate on the coin can not be removed (see next Do not).
X Do not clean coins - this will damage the coin and affect its resell value. (You can't hide from us, we will know if you've cleaned it!)
X Do not take minted bars out of their packaging - even if it's tempting, this can damage the bar and also affect its resell value.
X Do not be tempted into buying cheap* gold - if it's too good to be true, it probably is... (*below the spot price)
√ Do store your items in a dark, dry place - this helps maintain their color and condition as well as keeping it away from any prying eyes.
√ Do diversify your portfolio - we do not recommend to invest all your money in precious metals, for obvious reasons.
√ Do invest a small amount of money each month or year in precious metals - if you don't have a lot of money, try to put a little aside, it will be worth it!
√ Do invest in precious metals with Jaggards! - give us a try! We are sure you won't regret it.
These are just some of the things we recommend when investing in precious metals. If you are unsure about anything, please contact us and we will help you out!
Last but not least, a few things you should know...
→ 1 troy oz = 31.1 grams
→ 1 regular oz = 28.35 grams
→ 1 kilo = 32.15 troy ounces.
→ 9999 Gold = Pure gold
→ 999 Silver = Pure silver
→ 9995 Platinum/Palladium = Pure Platinum/Palladium
Now it’s up to you!
Hopefully now you have a better understanding of how easy it is to invest! As always, if you are in need of any help in finding the right product for you, please do not hesitate to contact us by clicking here. We pride ourselves on transparency so we will help you make the best decision at the current moment in time when you decide to invest.
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