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Gold as an investment

August 27, 2010 by  
Filed under Silver Investment Basics

Due to the imminent inflation, buying gold has become a hot trend. Investors try thus to get their money into safety.

When it comes to gold, most investment specialists think bullish. Within the EU gold bars and coins for investment are free of VAT. Within the USA investors are taxed at 15, 23, 28 or 35 percent. Gold can be bought either in forms of physical gold (gold coins, bars) oder Exchange Tranded Founds/Certificates (ETF/ETC) that are backed with a special amount of gold. Xetra gold is a good choice. It is currently the most important ETF traded at the stock exchange. When buying certificates one should pay attention that it is backed sufficiently with gold, otherwise you will lose all your money when the bank goes bankrupt.The most famous gold coins for investment are Krugerrand, Maple Leaf, American Eagle and Silver Philharmonic.

If one thinks of gold, one might think of silver as an investment als well. But where is the difference? Whereas gold is mainly used for jewelry and as an investment, silver is primarily used and consumed by the industry. In times of a economic recession it is thus better to invest in gold instead of silver, as the latter is not needed for production. There are some other precious metals that might be worth a thought: Platinum, which is mainly used for jewelry and for catalyzers. Platinum, a very expensive precious metal, has raised its value in the years as for 1999 about 570%! Palladium is not as precious as gold. It is mainly used in the industry, for medical instruments and for the car industy. There is one famous coin which is completely made of palladium: The Palladium Maple Leaf that exists as for 2005 in a special limited edition. Other precious metals are normally not used as an investment.

What about diamonds? For a layperson it is normally quite hard to determine the value of a diamond. It depends mainly on four main criteria: color, cut, clarity and carat. There is no special diamond exchange market as for gold as every gem has a different value. Furthermore diamonds can be reproduced nowadays artificially and these artificial diamonds can hardly be distinguished from real diamonds.

How to sum this up? Diamonds are nice for jewelry, but not appropriate as a investment. To get your money into safety, one should buy gold (or silver).

Frank Eschmann
Bruchstra├če 6a
67158 Ellerstadt

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