The World Gold Council’s Q3 2011 report states that the demand for Types Of Gold including gold bars and coins increased 29% to 390.5 tonnes, up from 303.0 tonnes in Q3 2010. Global demand for jewellery, in terms of value, reached a quarterly record of $25.5 billion, 24% higher than the third quarter of 2010. From the economics point of view, purchasing the physical form of gold is preferred by many. According to such buyers, not only does buying the physical form of gold protect your wealth from inflation, selling it at the right time can yield big dividends too.

Different Types of Gold

Gold comes in different physical forms and it is important that you understand the different types of gold before you make any purchase in a gold portfolio. The different types of gold include:

•    Gold coins: There are generally two types of gold coins, numismatic gold coins and bullion gold coins. While the former is used primarily for collecting purposes, due to its historical significance, the latter is used as a means of preserving wealth and is valued by the percentage of gold contained. The advantage of buying gold coins is their easy availability and also the fact that they can be purchased for relatively small amounts of money. The liquidity quotient associated with these coins means that you can sell/buy them from anywhere in the world.

•    Gold jewelry: The exceeding demand for gold jewelry, especially in countries like India and China, has led to a rise in demand and price. Jewelry prices increase drastically during festive seasons and many people prefer this form of gold purchase, as it can be used for personal as well as financial purposes.

•    Scrap gold: Broken or bent jewelry, chains and bracelets all fall under the scrap gold category. The value of scrap gold depends on the percentage of gold contained in item. Since these items can be recycled to generate new pieces of jewelry, they generally fetch a reduced prices in the market.

•    Bars and bullion: Gold bullion is another form of gold buying that is favored by many. Unlike coins, gold bars do not have much artistic value attached to them. The true value of gold bars is determined from the percentage of gold contained in them. The carat is the unit of measurement used to determine the number of parts in 24 that are pure gold, where 24 carat is considered to be the purest form. A 22 carat piece would contain 22 parts pure gold and 2 parts some other metal like copper to increase durability. When buying any physical gold item, always ask about its carat specifications.

Factors to Consider Before Selling Your Gold Investment

If you want to get the best out of your gold purchase, you should:

•    Determine the purity of your gold item: Gain knowledge about the carat measurement to know the purity of your gold item. The higher the carat value, the better the price you can get.

•    Know the weight of your gold item: Know beforehand the weight of your gold item because the pricing of the item will also depend on its weight. Most people do not know the weight of their gold items and are therefore cheated by traders.

•    Study the market trends: The current market condition plays a big role in determining gold prices. Gain knowledge of the market specifics to accurately predict the best period to sell your gold buy and ensure good returns.

One way to ensure that you get the best out of your gold buy is to enlist the services of an experienced gold trader, who can help you make the right decision on different types of gold.