Your guide to investing in Gold

Gold is an evergreen investment that people undertake to diversify their investment portfolios, ensuring stability to a certain extent in this economic climate of high inflation and a volatile stock market.

Determining the Value of Gold

The value of gold is decided by measuring its purity and weight, which are then multiplied by the spot price of gold to determine its overall value. The Bullion Hub website updates live gold prices every fifteen minutes, operating 24 hours a day. This ensures that buyers and sellers can observe the market.

Measuring the Purity of Gold

Gold, apart from bullion, is usually mixed with other metals and alloys. The carats stamped on gold determine the proportion of gold concerning other metals, ranging from zero to twenty-four. The carat is directly proportional to the content of the gold. The higher the proportion of gold compared to other metals such as silver, palladium, or copper, the higher the carat. Pure gold is usually 24 carats, representing a product made of 100% gold content.

Below you can see the purity of gold by carat:

Carat	Gold Content
10	41.7%
14	58.3%
18	75.0%
22	91.7%
24	99.9%

 

How can we determine the weight of the gold?

The weight of gold bullion is measured in ounces. However, this metric of ounce is not an imperial ounce; it is a ‘Troy’ ounce. What is the difference between the two, you may ask?

An imperial ounce is 28.35 grams, whereas a troy ounce is 31.1035 grams to be precise. According to this, the troy ounce is heavier by approximately 10%.

Usually, people do not know the difference between the troy and imperial ounce and get confused. It is incredibly important to know the correct weight measurements so that you are well-informed whether you are buying or selling gold. 

How can you purchase physical gold in Australia?

There are various forms in which you can purchase gold in Australia, such as bullion, coins, or jewellery.

1. Bullion bars

Gold bullion bars range in weights and sizes from one gram to more than ten kilograms. The bars have a stamp of purity level along with the weight. We, at Bullion Hub, source bullion bars from various brand names, including ABC Bullion, The Perth Mint, Melbourne Mint, etc.

You can check out the variety of gold bullion we have here.

2. Gold Coins

The Royal Australian Mint is the only producer of the coins circulating in Australia currently. It opened in 1965, and since then, it has produced over 15 billion coins.

There are three kinds of coins that are made at the Royal Australian Mint. The circulating coins are for everyday cash transactions; the collector coins have a legal tender, but they are produced for the purpose of gifts or collection only, and finally, investment coins.

The investment coins are produced in large quantities. They are relatively less costly and an easier way to penetrate the gold market.

In comparison to bullion bars, the gold coins have lower gold content, which is why it is a cheaper investment. Other Australian mints, apart from Royal Australia, also produce and sell non-circulating coins that are made of different kinds of metals. However, there are companies that produce pure gold coins, such as ABC Bullion, The Perth Mint, The Melbourne Mint, and other such companies.

The reason why these coins are so popular is that they have a strong holding in the historic market and are treated as unique collector’s items.

3. Gold Jewellery

Jewellery is another popular avenue for buying gold. However, like gold coins, you will pay a markup when you compare it with the content of gold in the jewellery piece you have.

This markup is mostly north of 20% and can be greater depending on the manufacturer. This markup usually covers the costs of labour, design, manufacturing, and the retail margin.

You can easily calculate the markup if you are aware of the weight and carat of the jewellery piece as well as the current spot price of gold. Due to this reason, some retailers are hesitant to advertise the weight of jewellery.  

For instance, if you are buying a 21-carat gold ring from a luxury designer for $4200 but the current value of gold content in the ring is $700, that means you are basically paying a markup of 6 times for the brand name, craftsmanship, and retailer’s profit. However, if you buy the same 21-carat gold ring from a high street retailer for $1050, that means you are paying a markup of about one-half on the underlying gold value of $700. Understanding the cost of gold per ounce is crucial for investors looking to diversify their portfolios and protect their assets.

Jewellery also declines in its value upon purchase, making it a less stable investment. If you are looking to invest in jewellery, keep any sales documentation and proof of value as it will make it easier to resell in the future.

Factors to Consider When Buying Physical Gold

In case you decide you want to invest in physical gold, it is important to keep the following factors in mind:

• Storage: Physical gold needs to be in a safe storage place. It is discouraged to keep it in your house. It should be kept at a distance from damp, corrosives, and metals, including silver. The good thing is Bullion Hub offers specialized storage solutions so you can get your precious metals here as well as figure out a way how to safely store them.
• Insurance: In case you decide you want to keep your gold at home, please make sure that you have a home insurance policy that covers it. In case you are using a third-party insurance facility including ours, you must check if they hold the right kind of insurance.
• Reliability: No matter what type of gold you want to buy, make sure you deal with a reputable name such as our own. It is important to do your independent research to ensure the seller is legitimate.
• Purity: The purity is determined by the gold content in the bar, coin, or jewellery. A high carat (i.e., 21 carat or above) is preferable as it is going to have more gold and is less prone to tarnishing. The higher carat gold requires more maintenance as it can be easily damaged or scratched.

The gold content in the bar, coin, blocks of gold or jewellery determines its value. A high carat (21 carat or above) is preferred as it contains a higher proportion of gold and is less likely to tarnish. That said, the higher carat gold is less durable and requires more care to be taken so that it’s not scratched or damaged.