A TIMELESS, AND GOLD IS THE FOUNDATION OF A PROPERLY BALANCED INVESTMENT PORTFOLIO How to buy gold VERY TIMELY INVESTMENT Gold is easy to buy, sell and store. It is available at coin and precious metals dealers and selected banks and brokerage firms across the U.S. and around the world. For thousands of years, gold has been prized for its rarity, High risk You can make purchases in virtually any amount, ranging its beauty, and above all, for its unique characteristics as from a fraction of an ounce upward. The weight and purity a store of value. Nations may rise and fall, currencies of gold coins and bars are precisely controlled and stan- come and go, but gold endures. Moderate risk dardized by internationally-recognized refiners and mints, In today’s uncertain climate, many investors turn to gold allowing you to buy with confidence and sell with ease. because it is a “currency without borders” — an important Gold bullion products are based on the underlying price and secure asset that can be tapped at any time, under Low risk of gold bullion, plus a small premium. As with any invest- virtually any circumstances. ment, it is always advisable to check the terms of the But there is another side to gold that is equally important, GOLD purchase agreement, procedures and prices offered by and that is its day-to-day performance as a stabilizing the dealer. Prospective investors should consult their influence for investment portfolios. These advantages are financial advisor regarding tax laws or other circumstances. currently attracting considerable attention from financial Gold responds when you need it most YOUR GUIDE professionals and sophisticated investors worldwide. Recent independent studies have revealed that traditional TO THE WISDOM, diversifiers often fall during times of market stress or in- Buying gold bars The bars are Gold is an effective diversifier stability. On these occasions, most asset classes (including International refiners make it convenient for investors to generally stamped THE VALUE AND THE Diversification helps protect your portfolio against fluctua- traditional diversifiers such as bonds and alternative own bullion by offering gold bars in a variety of weights .995 (99.5% pure gold) or PRACTICALITIES OF tions in the value of any one asset class. Gold is an ideal assets) all move together in the same direction. There is and sizes, ranging from one troy ounce to 400 troy ounces, higher purity, along with the individual bar’s weight. Gold diversifier, because the economic forces that determine the no “cushioning” effect of a diversified portfolio — leaving the size of an internationally-traded bullion bars can be purchased from selected commercial ACQUIRING GOLD. price of gold are different from, and in many cases opposed to, the forces that influence most financial assets. As the investors disappointed. “London good delivery” bar. (One troy ounce equals banks, brokerage houses, and precious metals dealers. However, a small allocation of gold has been proven to chart below indicates, gold prices tend to move in the 1.09714 regular Buying gold coins significantly improve the consistency of portfolio perform- opposite direction of stocks. or avoirdupois Gold bullion coins are popular with investors because ance, during both stable and unstable financial periods. ounces.) they combine intrinsic value with artistic beauty. The RETURNS OF GOLD AND STOCKS Greater consistency of performance leads to a desirable bullion coin represents an investment in pure gold, and 20% outcome — an investor whose expectations are met. Broker commis- 1998–2001 because it is legal tender, the country of origin guarantees sions on buying 15% its authenticity. The bullion coin bears a face value that Gold is highly liquid and selling gold is largely symbolic; its true value depends on its gold 10% Gold can be readily bought or sold 24 hours a day, in bars are minimal, content and the daily price of gold. large denominations and at narrow spreads. This cannot and in most cases, 5% be said of most other investments, including stocks of purchasing bars is Bullion coins are minted in a variety of weights ranging 0 the world’s largest corporations. Gold proved to be the the most cost-efficient from 1⁄20 of an ounce to 1 kilogram. Bullion coins can be most effective means of raising cash during the 1987 means of owning gold. easily bought and sold virtually anywhere in the world. -5% stock market crash, and again during the 1997/98 Asian Bars bearing the “hallmark” Prices for popular one-ounce coins are quoted daily in -10% debt crisis. So holding a portion of your portfolio in gold (logo) of internationally recognized most of the world’s newspapers. Prices for bullion coins GOLD S&P 500 can be invaluable in moments when cash is essential, refiners are the easiest to sell. These refiners “assay” or are based on the underlying price of gold bullion, plus a -15% whether for margin calls or other needs. test the metal for its purity or fineness. small premium. 6/98 9/98 12/98 3/99 6/99 9/99 12/99 3/00 6/00 9/00 12/00 3/01 6/01 9/01 GLOSSARY OF GOLD TERMS BUYING GOLD BULLION: Assay: To test a metal for purity. Legal Tender: The coin or currency which the national mon- Founded in 1987, and headquartered in London, the YOUR CHOICES Bid/Ask: “Bid” or “buy” is the price a dealer is prepared to pay etary authority declares to be WORLD GOLD COUNCIL is a not-for-profit organization universally acceptable as a medi- funded by the world’s leading gold mining companies for gold bullion. “Ask” or “sell” um of exchange; acceptable for Where to buy gold bullion: is the price offered by the seller. to promote the many uses of gold. The Council, which instance in the discharge of debts. Available at coin and precious metals dealers and selected banks (See also definition of “Spread” and brokerage firms across the U.S. and around the world. below.) Liquidity: The quality possessed operates in 22 countries around the world, is an authori- by a financial instrument of being tative source for research on gold and its role as a Bullion: Refined gold that is at readily convertible into cash with- Bullion Coins: least 99.5% pure, usually in the out significant loss of value. portfolio diversifier. (Although the Council does not American Eagle, Australian Nugget, Austrian Philharmonic, form of bars, wafers or ingots. Canadian Maple Leaf, Mexican Peso, South African Krugerrand. sell gold, it does facilitate informed decision-making by London Fix: The twice-daily bid- 1 1 1 1 Bullion Coin: A legal tender coin ding session in London of the five disseminating information to investors and portfolio Sizes: Available in ⁄20, ⁄10, ⁄4, ⁄2, one ounce and one kilogram. whose market price depends on major gold traders, at which the Price: Based on the price of gold, plus a small premium. its gold content, rather than its managers.) The Council also encourages the use of gold price is fixed or set. The rarity or face value. London Fix provides the basis for gold in jewelry, explores new industrial applications, Bars and Wafers: Bars bearing the “hallmark” (logo) of internationally recognized Face Value: The nominal value many gold contracts worldwide. and advocates gold as a reserve asset for the world’s refiners are the easiest to buy and sell. The bars are generally given to a legal tender coin or cur- Numismatic: Coins that are val- stamped .995 (99.95% pure gold) or higher purity, along with the rency (for example a 1-oz. gold central banks. ued for their rarity, condition and individual bar’s weight. American Eagle coin has a face beauty beyond the intrinsic value Sizes: Range from one gram to 400 ounces. value of $50). of their gold content. Generally, premiums for numismatic coins make an investment in gold Price: Based on the price of gold, plus Fine, Fineness, Fine Gold: The a small premium. are higher than for bullion coins. quantity of pure gold contained in 1,000 parts of an alloy. A normal Option: The right, (not the “good delivery bar” of 0.995 fine- obligation), to buy or sell a com- ness contains 995 parts of gold modity or a financial security on and 5 parts of another metal. a specified date in the future. Gold is produced in bars up to a Gold is the ideal gift purity of 999.9 (often referred to Pennyweight: An American unit In many cultures, gold serves as a family treasure or a as “four nines”). of weight for gold. Twenty penny- THE GOLD GUIDE weights equal one ounce. wealth transfer vehicle that is passed on from generation Futures Contract: A firm com- to generation. Gold bullion coins make excellent gifts mitment to make or accept deliv- Premium: The amount by which ery of a specified quantity and the market value of a gold coin for birthdays, graduations, weddings, holidays and other exceeds the actual spot value of occasions. They are appreciated as quality of a commodity on a spe- cific date in the future. its gold content. Part of the pre- make an investment in gold mium is recovered by the seller much for their intrinsic value Gold Standard: A monetary sys- at resale. as for their mystical appeal tem based on convertibility into gold; paper money backed and Restrike: A modern replica and beauty. And of previously issued coins. interchangeable with gold. because gold is Governments and their mints can Grain: One of the earliest weight choose to “restrike” a previous available in a wide units used for measuring gold. issue rather than introduce new range of sizes and One grain is equivalent to 0.0648 coinage. denominations, grams. Spot Price: Sometimes referred www.gold.org you don’t need Hallmark: Mark, or marks, which to as the cash price. The current indicate the producer of a gold bar price in the physical market for to be wealthy and its number, fineness, etc. immediate delivery of gold. to give the gift Karat: Unit of fineness, scaled Spread: The difference between of gold. from one to 24. 24 karat gold (or Bid (the price a buyer is prepared pure gold) has at least 999 parts to pay for gold) and Ask (the price pure gold per thousand; 18-karat a seller offers) prices. has 750, parts pure gold and 250 parts alloy, etc. Troy Ounce: A unit of weight, equal to about 1.1 avoirdupois Kilo Bar: A bar weighing one (ordinary) ounces. The word kilogram – approximately 32.1507 ounce when applied to gold, troy ounces. refers to a troy ounce.