How to Invest in Gold
Wealthy gold investors prefer buying standard investment coins, plus moderate amounts of other investment products. They add smaller amounts of silver to the portfolio and store their precious metals at home.
According to gold-selling firms, the average check for online purchases of investment-grade gold is 3,000 euro. But what should a wealthy investor do when buying precious metals in order to protect the savings from currency devaluation? Let’s assume that one wants to invest 10 million euro in precious metals, and that silver should constitute 30% of the investment portfolio.
To minimize the risks and protect one’s gold, it’s better not to store it in your basement. And by the way, would you like to know the weight of 3 million euros worth of silver? At the current price of 21 euro an ounce, this amount of money would buy you 115,384 ounces of silver, or three and a half tons. The remaining 7 million euro will buy 4,575 ounces of gold in South Africa-minted Krugerrand coins, which are very popular across the globe. A single Krugerrand coin costs 1,530 euro, so you’d get 142 kilograms of coins.
The key risk when buying such a large quantity of precious metals is storing and managing those assets. This is one of the reasons why large investors are forced to use the services of specialized companies that sell and store gold. An alternative is buying ‘paper gold’ instead of physical gold, since it doesn’t require any storage space.
There are lots of companies that provide gold and silver custody services for mid-sized and large clients. These include ETF funds (the largest being SPDR Gold Trust) and ETC funds, such as EUWAX Gold. Investors receive the fund’s shares, which are backed by physical precious metal. If needed, one can request a physical delivery of gold to one’s address for a fee, but this rarely happens.
When buying millions’ worth of gold, investors usually only store a few coins and bars at home, entrusting the rest to professional custody companies that have their own vaults.
Rich investors have more investment opportunities than most people: for instance, they can buy rare or exclusive coins on auctions. From time to time, a very special coin will appear in the market, but only the lucky few millionaires will be able to purchase it.
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