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India Gold Rate

Spot price of gold bullion, what it is and how it has changed since 2007-2013

The sky rocketing prices of gold, silver and platinum have gathered the attraction of many investors. A number of people are considering investing in these metals as a very safe and secure mode of conserving their money. Countries such as India, China and Russia have been buying up large, seems all the gold is moving east.

 Price fluctuation since 2007

If we take a look at the history of gold price in India for the past 86 years, .i.e since 1925, we find an astonishing fact that there has been a huge leap in the price of 10 gm of gold. In 1925, 10 gm of gold costed Rs.19 approximately. In the year of Indian independence, it was Rs 89. But if we take the prices in the 21st century, the values are mind boggling. At the beginning of the millennium, 10 gm of pure gold costed Rs 4,400 while in the past five years, i.e since 2007, the price has sky rocketed from Rs 10,800 in 2007 to Rs 29145 till August 2013. This shows that there is a very big gap that has developed between the demand and supply mainly because of the huge amounts of gold stored by central banks.

However, if you are new to this world, you may be taken for a ride by the gold sellers if you are not thoroughly aware of the trade. We try to bring to light some of the basic terms that one needs to know before investing in this sector.

  Bullion

The term bullion is used to describe the bars, coins of precious metals like gold, silver and platinum. In layman’s terms it means gold or silver sold in bulk. The value of bullion is decided depending on its percentage purity i.e the amount of gold present by mass. It is different from other forms of gold like jewellery or currency, the value of which depends on other factors such as aesthetics. So, when you are buying bullion the amount that you pay is only for its market value which is inclusive of a minor amount of manufacture to bring the metal into the form of bars or coins. Therefore, gold bullion is one of the most popular and safest investment options as you do not have to pay any extra charges because you are purchasing the metal in its purest, unmodified form.

As mentioned earlier, gold bullion comes in different forms like bars and coins, which have their own merits and demerits

Gold Bullion Bars

At the mention of the term “pure gold”, our mind creates an image of long shining golden bars stacked up in a pile. That is not far from reality. Gold bars are very easy to store and therefore can be purchased in large quantities which makes them a very good option of investment. However, one demerit is that when you are ready to sell it, the liquidation costs are more. Moreover, as they are larger than coins, many dealers consider them to be less versatile. Still, many serious gold investors prefer bars over coins.

Gold Bullion coins

The difference between a bar and a coin is just their shape and size. Coins, as we all know are rounded and much smaller in size than bars. Many governments like the United States and Canada manufacture these coins. A small amount of alloy is added to the gold coins in order to make them hold their shape. The United States American Eagle Gold Bullion Coins usually contain 92% gold. Because of their small size, they are much easier to liquidate and are a good option for new gold investors to begin their investment.

 

 Spot Price

Spot price, defined in simple terms is the cash price of commodities like gold, silver and platinum at a given time and place. It excludes other costs like storage charges, delivery fees, broker commissions, transaction fees etc. It is the exact price of the precious metal.

However, if you are a new investor , you should know the fact that gold bullion commonly trades at a price marginally higher than the spot price because of the fabrication fee levied on it by the government minting agencies. The spot gold price is usually mentioned for 100 ounce or larger gold bars of .999 purity. The bullion coins usually will be sold at a price of 3-15% over spot price depending on the size of the coin and quantity.

The supply and demand as well as speculation are the major factors that determine the spot price of gold. But, unlike other commodities, a larger role in determining its price is played by the saving and disposal rather than its consumption. If we consider the huge quantity of gold stored above ground, i.e all the gold mined till date and compare it with the quantity mined annually, then we understand the price of gold is rather more affected due to sentiment or demand rather than supply.

Therefore, if you are a new investor, you must consider the fluctuating price of gold in mind and making a prediction of the future prices by consulting an expert, you must wisely invest a safe amount of your hard earnings in this commodity. 

 

 

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The difference between a bar and a coin is just their shape and size. Coins, as we all know are rounded and much smaller in size than bars. Many governments like the United States and Canada manufacture these coins. A small amount of alloy is added to the gold coins in order to make them hold their shape. The United States American Eagle Gold Bullion Coins usually contain 92% gold. Because of their small size, they are much easier to liquidate and are a good option for new gold investors to begin their investment.

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The supply and demand as well as speculation are the major factors that determine the spot price of gold. But, unlike other commodities, a larger role in determining its price is played by the saving and disposal rather than its consumption. If we consider the huge quantity of gold stored above ground, i.e all the gold mined till date and compare it with the quantity mined annually, then we understand the price of gold is rather more affected due to sentiment or demand rather than supply.

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