Just how do you invest in gold bullion?

With the world economy falling apart around us this is one of those times where many people wish that they had invested in gold as, of course, with everything else falling gold is doing quite nicely as usual.

The key thing is to keep your savings and investments diversified and moreover to keep to a regular savings and investment programme. If you’re doing that, it shouldn’t really matter whether the price of gold is sitting around the $200 mark or if it’s sitting at the $900 mark since, as with all investments, it’s pretty much impossible to hit the bottom of the market when you’re buying and it’s equally difficult to hit the top when you’re selling. That said, the gold price is currently off the top achieved in May.

But if you’ve decided to buy some gold bullion for a rainy day, how do you go about it? In principle there are all kinds of investment schemes around these days which let you buy a share in a pile of gold and that’s a sensible way to go about it in that the costs are lower than they are if you some gold bars. However, that lower cost comes at a price, namely that you’re trusting that some intermediary actually has that piece of gold for you and that, should they go bankrupt, that you’ll be able to get your little piece of gold. Certainly these firms have all kinds of reassuring things to say about that but at the end of the day, to my mind, there’s nothing to beat having a lump of gold in your hand.

If you’re aiming at looking after the gold yourself it’s relatively easy to buy it these days by way of Bullion by Post who offer the usual range of investment sizes of gold bars. In terms of bars, the smallest that you can get is the one ounce bar which weighs in at around £600 these days (the price varies throughout the day) or you can get the one kilo bars that you see in photos of Fort Knox and the like for around £19000. The larger bars carry less of a premium over the spot price for gold (ie they are cheaper per ounce of gold) but unless your portfolio is really large the larger bars aren’t going to be terribly practical purchases for you.

One thing to bear in mind if you’re collecting these things in your house is the security and insurance aspect. Clearly if you are stockpiling gold in your house you’re building up a major asset and your insurance company would want to see it adequately protected. It’s possible to avoid this hassle by using a safety deposit box in your bank which will save on the insurance and you may be able to get it free too depending on your bank.

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